Amid historic stock market highs, investors optimistic about future

The Istanbul Stock Exchange (IMKB) has been unstoppable in the last couple of weeks, breaking record after record, and benchmark interest rates have reached historic lows, but this rosy picture may soon be marred with a downward spiral, at least in the short term, some analysts argue. The IMKB-100 index has gained more than 10,000 points over the last two-and-a-half months, rising to 70,647 points yesterday, an all-time high. What's more, this number also stands as a record in terms of dollars. It had already reached pre-crisis records in lira terms in April, but the recent hike elevated it to an all-time high in dollars terms as well. Turkey is the first country to reach pre-crisis levels in terms of the performance of capital markets. This represents a positive decoupling in which Turkish stocks are being priced much higher than global markets on average. The markets were already buoyant after last month's referendum on constitutional changes, but positive news from domestic and international outlets gave additional momentum to Turkish markets. Halil Recber, a technical analyst at Anadolu Investment, cited falling interest rates as the first and foremost reason for this. Another factor feeding the upward trend, for Recber, is high confidence in the Central Bank's chances of reaching its inflation targets. What adds to this is the government's commitment to stick to fiscal discipline with its medium-term economic program, despite next year's general elections. Selim Isiklar of Info Securities said the end of ambiguity after the public approval of proposed changes in last month's referendum buoyed the markets, as this was broadly welcomed as a vote of confidence in the government and a harbinger of victory in the general elections.