Investor relations blog

(Turkish) Razztwizzler

Last week the literary community celebrated the life and works of probably one of the greatest and most recognisable children’s literature authors the world has ever known: Roald Dahl. Who hasn’t read or heard of Matilda, Charlie and the Chocolate Factory, Fantastic Mr. Fox, The Witches, James and the Giant Peach, The BFG,… Like famous authors before him ― William Shakespeare, Lewis Carroll― Dahl’s literature is particularly unique with his characters often speaking in alliteration, onomatopoeia and anagrams. Dahl actually invented his own language (Dahlian gibberish) and vocabulary. Words like ‘Razztwizzler’ defined as something wonderfully exciting or enjoyable; ‘Crodsquinkled’ i.e. being in a hopeless situation; ‘Ringbeller’, a really splendid dream, the kind that makes you wake up smiling and happy; ‘Zozimus’, a thing so magical yet based in reality. And the list goes on….

With earnings season now mostly behind us, last trading week investors turned their attention to the policy decisions of the European Central Bank (ECB), The Bank of England (BoE) and especially The Central Bank of Turkey (CBRT) with all three Central Banks announcing policy decisions on Thursday within one hour of each other.

As expected by the market, The ECB announced it would halve its quantitative easing programme (QE) or asset purchasing programme as of October to EUR 15 billion a month and that it would  stop the QE programme all together at the end of this year, conditional on economic developments. The ECB also confirmed it would leave the all-time low i-rate unchanged until at least after the summer of 2019. In line with market expectations, The BoE voted unanimously to maintain the Bank Rate at 0.75% and to maintain the stock of corporate bond purchases (£10 billion) and UK government bond purchases (£435 billion). But investors were in particular eagerly awaiting the decision of the CBRT. Since the start of the year Turkey’s currency, the lira, already lost some 40 % and investors started to believe, to put it in Dahlian gibberish, the Lira was ‘Crodsquinkled’. To put a floor under the tumbling lira and to tame the inflation in Turkey, which reached almost 18% in August, international investors maintained that a sizeable i-rate increase should be announced with market consensus of a rate hike at around 300 basis points but some investors had been hoping for even more. And the CBRT did not disappoint, on the contrary. On Thursday the CBRT raised its benchmark rate by 625 basis points to 24% (from 17.75%), meaning it has now increased interest rates by 11.25 percentage points since late April. Investors welcomed this ‘razztwizzler’ decision which boosted the lira (+4% vs. the $ last Thursday) and eased investor concern about political influence on Turkey’s monetary policy.

Last trading week, with overall trading volume still below average, the Ageas share closed at EUR 43.96 (-1.1%).