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March 22, 2021, 11:32 a.m. EDT

Lira and Turkish stocks collapse after Erdogan fires central bank chief, as European airline stocks drop

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By Steve Goldstein

Turkey’s currency and stocks collapsed after the abrupt termination of its central bank head, a move that led investors to take a cautious stance toward risky assets on Monday.

The dollar /zigman2/quotes/210561895/realtime/sampled USDTRY +0.1235% rose by as much as 15% vs the Turkish lira, and the BIST-100 stock-market index /zigman2/quotes/210598028/delayed TR:XU100 -0.05% traded 10% lower after President Recep Tayyip Erdogan’s decision to replace Governor Naci Agbal with Sahap Kavcioglu — the third change at the Central Bank of the Republic of Turkey (CBRT) in two years. Turkey’s central bank last week hiked interest rates by 2 percentage points to 19%, a full percentage point more than expected.

“With Naci Agbal’s removal from the CBRT, Turkey loses one of its last remaining anchors of institutional credibility,” said Phoenix Kalen, a strategist at French bank Societe Generale. “During his short tenure, Agbal had succeeded where various predecessors had not – in cultivating trust in the central bank’s inflation-targeting framework, in restoring monetary policy independence, in encouraging international investors to re-engage with the crisis-prone Turkish narrative, in driving an 18.0% rally in the lira against the dollar, and most crucially – in arresting and even reversing the damaging trend of dollarization in the economy.”

BBVA /zigman2/quotes/209653399/delayed ES:BBVA -0.95% , which owns just under half of Turkey’s Garanti BBVA, tumbled 7% in Madrid.

That caution spread to stocks, where the Stoxx Europe 600 /zigman2/quotes/210599654/delayed XX:SXXP -1.14% was fractionally lower, though U.S. stocks /zigman2/quotes/210599714/realtime SPX -4.04% rose in early action.

Airline stocks including International Airlines Group /zigman2/quotes/208070069/delayed UK:IAG -0.29% , easyJet /zigman2/quotes/202825892/delayed UK:EZJ -0.44% and Ryanair skidded after scientific advisors were reportedly urging U.K. Prime Minister Boris Johnson not to lift a ban on foreign holidays. That comes as the European Union has struggled in its vaccination campaign and is now considering blocking exports of AstraZeneca-made vaccines to the U.K.

Shares of AstraZeneca /zigman2/quotes/203048482/delayed UK:AZN -2.33% , which separately reported that its vaccine, made with Oxford University, was 79% effective in preventing COVID-19 and 100% effective in preventing severe disease in a U.S. trial, rose 3%.

Volkswagen /zigman2/quotes/203434344/delayed XE:VOW3 +0.04% and its majority owner Porsche Automobil Holding /zigman2/quotes/202769371/delayed XE:PAH3 -1.50% both advanced, continuing their stellar run since VW laid out its electric vehicle and battery plans. Analysts at Deutsche Bank hiked its price target on VW by 46% and on Porsche by 38%.

“With the global roll-out of the ID.4 we see a good chance that VW could surpass Tesla’s /zigman2/quotes/203558040/composite TSLA -6.80% [battery electric vehicle] sales as soon as next year, which should increase the credit given to its EV strategy,” said the analysts.

/zigman2/quotes/210561895/realtime/sampled
US : Tullett Prebon
15.9671
+0.0197 +0.1235%
Volume: 0.0000
May 19, 2022 12:36a
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/zigman2/quotes/210598028/delayed
TR : Istanbul Stock Exchange
2,393.61
-1.22 -0.05%
Volume: 2.91B
May 18, 2022 6:10p
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/zigman2/quotes/209653399/delayed
ES : Spain: Madrid
4.85
-0.05 -0.95%
Volume: 19.25M
May 18, 2022 5:38p
P/E Ratio
7.49
Dividend Yield
1.33%
Market Cap
€32.61 billion
Rev. per Employee
€297,803
loading...
/zigman2/quotes/210599654/delayed
XX : STOXX
433.95
-5.02 -1.14%
Volume: 0.00
May 18, 2022 11:03p
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
3,923.68
-165.17 -4.04%
Volume: 2.71B
May 18, 2022 4:56p
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/zigman2/quotes/208070069/delayed
UK : U.K.: London
123.96 p
-0.36 -0.29%
Volume: 18.64M
May 18, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£6.17 billion
Rev. per Employee
£128,176
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/zigman2/quotes/202825892/delayed
UK : U.K.: London
501.00 p
-2.20 -0.44%
Volume: 5.10M
May 18, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£3.80 billion
Rev. per Employee
£112,154
loading...
/zigman2/quotes/203048482/delayed
UK : U.K.: London
10,244.00 p
-244.00 -2.33%
Volume: 2.27M
May 18, 2022 4:35p
P/E Ratio
N/A
Dividend Yield
2.05%
Market Cap
£162.51 billion
Rev. per Employee
£367,302
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/zigman2/quotes/203434344/delayed
XE : Germany: Xetra
145.98
+0.06 +0.04%
Volume: 724,823
May 18, 2022 6:30p
P/E Ratio
4.03
Dividend Yield
5.18%
Market Cap
€86.69 billion
Rev. per Employee
€372,430
loading...
/zigman2/quotes/202769371/delayed
XE : Germany: Xetra
72.08
-1.10 -1.50%
Volume: 868,336
May 18, 2022 6:30p
P/E Ratio
N/A
Dividend Yield
3.55%
Market Cap
€22.41 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/203558040/composite
US : U.S.: Nasdaq
$ 709.81
-51.80 -6.80%
Volume: 29.27M
May 18, 2022 4:00p
P/E Ratio
96.31
Dividend Yield
N/A
Market Cap
$789.04 billion
Rev. per Employee
$626,347
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