Turkish stocks traded flat on Friday, while Aviva's Turkish unit soared 12 percent amid speculation it may buy a 50 percent stake in rival Aksigorta, boosting its position in the high-potential market. Aksigorta rose 2.2 percent to 2.36 lira, outperforming the benchmark Istanbul stock index, which was little changed at 66,267.34 points.
"The market is pricing a merger between Aviva and Aksigorta," said one trader. "M&A talk comes to mind. Consolidation would be very positive for insurers," another trader said. Aksigorta said studies on "strategic options" were continuing after a newspaper reported that parent company Sabanci Holding agreed to sell a 50 percent stake in the insurer to Aviva.
Aviva and Sabanci Holding jointly own life and private pension fund company Avivasa. Turkish equities gained for a third day after the swings over the past week following the central bank's moves to cut interest rates and raise banks' reserve requirements in order to stem "hot money" inflows and curb credit growth.
"Turkish equities maintained an upward momentum three days in a row as local investors' buying appetite drove the market higher," wrote Is Investment in a report. "Trading range stands within 65,700 and 66,500 while there is not any significant event during the day." The market has fallen from a high of 71,776 points on October 25, but still stands around 24 percent higher this year. The yield on the benchmark August 8 2012 bond fell to 7.26 percent at the close of trading, compared with 7.31 percent on Thursday. The lira rose modestly to 1.5467, after closing at 1.5520 to the dollar on Thursday.
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