Stocks rise most in world as lira beats emerging peers

The government also expects Turkish banks to play a role in keeping growth strong, Prime Minister Binali Yildirim has said. instead of the general budget.” In 2013, the government considered using money earmarked for future unemployment benefits to create a fund for strategic projects, but that plan didn’t get off the ground.

This time, the government also expects Turkish banks to play a role in keeping growth strong, he said.

“Our banks will shift to a mentality of loans directed towards economic growth without capitulating on their lending criteria,” Yildirim said. “If necessary, preferential interest rates will be applied to investments in priority areas, while the difference will be paid for by the state’s loan-guarantee fund.”

Turkey’s economy, the largest in the Middle East, has consistently beaten estimates since the end of 2014, powered in large part by consumer spending owing to millions of refugees displaced by the civil war in Syria. The economy grew 4.8 per cent in the first quarter of this year and 5.7 per cent during the preceding three months, the fastest expansion among the G20 top economies after China and India, according to data compiled by Bloomberg.

Yildirim, 61 years old, took office two months ago. He said what he called “ambush elections” would only cloud the outlook, adding the next poll would be held as scheduled in 2019.

“We have no time to lose with an election,” he said.

Most Turkish assets were poised for their best day since the failed coup battered investor confidence a week ago. Stocks, bonds and the lira advanced, while the cost of insuring the country’s debt against default fell, after Prime Minister Binali Yildirim said the government plans to set up a multibillion-dollar fund to support economic growth. The lira strengthened the most among 24 emerging-market currencies tracked by Bloomberg and the Borsa Istanbul 100 Index was the world’s best performer as of 1.27pm in Istanbul.

The lira depreciated to a record low against the dollar last week and the worst equity sell-off since 2008 wiped about $36 billion (Dh132 billion) from the stock market as investors fretted over the fallout from the coup attempt. The lira gained 1 per cent to 3.0363 per dollar. The currency’s one-month implied volatility, a gauge of expected swings, fell for a third day to 14 per cent after climbing to the highest level in more than a year last week.

The Borsa Istanbul 100 Index rose 2.9 per cent as 97 members advanced, more than any other day since February on a closing basis. The Borsa Istanbul Banks Sector Index added 3 per cent, the most in almost two weeks. Akbank TAS’s 2.8 per cent increase was the biggest contributor to gains on both the banking gauge and the country’s main stock index.

The average valuation for members of the Borsa 100 over the next 12 months relative to the MSCI Emerging Markets Index dropped to a seven-year low last week. Turkish stocks were trading at 7.8 times future earnings yesterday, up from 7.5 times after the sell-off. The country’s five-year local currency bonds rose for a second day as the yield retreated 17 basis points. Credit-default swaps dropped to 271 basis points after jumping to a five-month high last week.