Turkish Airlines stock surges 500 percent, leading massive market rally
Turkey's national airline stock is up a whopping 500 percent this year, the most among global airlines, helping drive a wider surge in Turkey’s stock market.
The stock has benefited from many of the factors driving gains in Turkey’s wider Borsa 100 index, which is up 172 percent this year, as local investors flock to equities to protect their savings against runaway inflation.
Turkey’s plunging currency has led to skyrocketing prices for citizens but is making the country a cheaper destination for foreign visitors. According to data by Bloomberg, a meal in Turkey that once cost $100 in 2020 is fetching around $41 today.
The number of Americans visiting Turkey in the first half of 2022 was up 76.8 percent over the same period last year. Those numbers, along with a surge in the freight business, have helped push Turkish Airlines' stock.
Ahmet Bolat, chairman of the national carrier, told reporters that the airline aims to double the number of US passengers travelling to Turkey to two million, a move that would put Turkey below the UK as the second-top destination for US citizens.
Bolat added that the stock had more room to go, setting a price target of 50 percent above Wednesday’s closing price.
Despite skyrocketing inflation, Turkey has continued to slash interest rates as part of an unorthodox economic policy promoted by President Recep Tayyip Erdogan. The flood of easy money has led to one of the highest growth rates among G20 countries but has battered savings and led to wild price swings.
Turkey’s interest rate stands at nine percent - among the world’s lowest - while inflation is approaching 86 percent this year. The disconnect has left Turkish citizens with few other options besides stocks to obtain a return on their money.
The investor frenzy has prompted Turkey’s main opposition leader, Kemal Kilicdaroglu, who is also a top contender for the presidency in the June elections, to warn investors of a stock market bubble.
“You’re entering the stock market to protect your savings from inflation, but the real bait is in those inflated values,” Kilicdaroglu said on Twitter this month. “They are preparing to rob small investors.”
But with Turkish stocks trading at a 50 percent discount to other emerging markets, there could be more room for them to rise. In dollar terms, the index is up 80 percent, making it the best-performing stock index tracked by Bloomberg.