This record is a partial extract of the original cable. The full text of the original cable is not available.

UNCLAS ISTANBUL 001925 
 
SIPDIS 
 
STATE FOR EUR/SE, EB 
TREASURY FOR INTL AFFAIRS 
NSC FOR BRYZA AND MCKIBBEN 
 
E.O. 12958: N/A 
TAGS: EFIN TU
SUBJECT: ISTANBUL ANALYSTS ON MARKET DEVELOPMENTS, 
OPTIMISTIC FOR 2005 
 
REF: ANKARA 7105 
 
¶1. (u) Summary: Istanbul market analysts were not surprised 
at the relatively moderate size of the post-EU decision 
rally, because they believe that much of the good news had 
already been priced into the markets during the last few 
months.  They expect, however, that interest in Turkish 
financial markets will increase beginning early next year, 
as Turkey attracts a broader base of global investors.  End 
Summary. 
 
¶2. (u) Bender Securities' Murat Gulkan told Econ Specialist 
that the already upbeat bond market welcomed the Central 
Bank's rate cut. He noted that Turkish Lira (TL) bond rates 
dropped by close to 2 percentage points in two working days 
on Friday and Monday.  Murat Cetinkaya, Head of Treasury for 
Diler Yatirim Bank, told us that fears of a possible crisis 
in Brussels had contributed to lira weakness in recent 
weeks.  The lira's appreciation on Monday, Cetinkaya 
explained, merely brought the rate back to its level from 
two weeks ago against the Euro-dollar basket. 
 
¶3. (u) Both Gulkan and Cetinkaya expect more intensive 
foreign investor trading following the Christmas and New 
Year holidays. With many investors preparing to close out 
their 2004 books, they are likely to wait until January 
before taking significant new positions.  Cetinkaya said he 
believes that most of the dollar supply came from local 
banks taking their positions before the foreigners come 
back.  Gulkan said a big-ticket corporate transaction such 
as Telsim (mobile telephone company), Star (media group), or 
one of the big banks might also trigger high volume F/X 
flows early next year.  Looking ahead at the coming year, 
Murat Ucer, an analyst for Eurosource who has generally been 
a voice of caution, told us that he expects macroeconomic 
stability throughout the coming year, although growth may 
slow considerably. 
 
¶4. (u) Comment: Istanbul-based (and some London-based) 
financial analysts believe that the December 17 EU decision 
will put Turkey on the radar screens of the big global 
funds, attracting a broader base of global investors than 
has been the case up until now.  Equity markets of Turkey's 
Eastern European competitors are already expensive, with the 
Czech Republic showing a 72 percent increase this year, 
Hungary 66 percent, and Poland 25 percent. The EU news, 
coupled with the Central Bank's long-awaited decisions to 
cut borrowing rates, resume F/X purchase auctions, and adopt 
inflation targeting, has left analysts bullish on prospects 
for 2005. 
 
Arnett