Crisis Trading: Turkcell (TKC:NYSE) could sell off in the aftermath of the Istanbul bombing

Posted July 27, 2008

Use any potential terror-caused dip in Turkcell (TKC:NYSE) to buy near $14 , with a short-term target of $17 and above.

by J. Christoph Amberger

Baltimore — (TFN): Terrorists exploded two bombs in a crowded pedestrian area of Istanbul, Turkey on Sunday. At least 15 people were killed and more than 150 were injured. This appeared to be the most serious terrorist attack in Turkey since twin truck bombs at two Istanbul synagogues killed 23 and wounded more than 300 on Nov. 15, 2003.

More often than not, the stock markets of countries hit by major terror attacks sell off in the immediate aftermath, sometimes up to 10-15% within 48 hours. Since the attack didn’t occur during trading hours but on a Sunday, chances are that the market repercussions of this particular act will be somewhat muted tomorrow.

For U.S.-based investors, the easiest way to leverage Crisis Trading strategies is to watch the ADRs of the respective country, and buy the one that has sold off most two or three days after.

The most prominent Turkish ADR is Turkcell Iletisim Hizmetleri A.S. (NYSE:TKC). The stock is already down over 40% since January 1, but had been staging a modest rally through July, to close at $16.03. Given aftermarket activity, I think we could test its recent lows of $14.38 again by noon tomorrow.

Its first-quarter net profit rose 78.9 percent to $486.8 million in what it called a slower market. Last quarter’s revenues had risen 21.6 percent to $1.57 billion year-on-year. There’s no slap-your-face-with-a-halibut reason that earnings should come in dramatically lower this quarter, probably to be announced in the first full week of August

Use any dip near $14 to buy, with a short-term target of $17 and above.

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