Mystery HFT "Dude" Is Propping Up The Entire Turkish Stock Market

We first met "The Dude" in March of 2016: no, not Jeffrey Lebowski, but an unknown HFT algo which would step in during times of Turkish market stress and bid up stocks with reckless abandon. Recall:

"There’s a giant bull in the [Turkey stock market] china shop," exclaims one trader, but (unsually for Turkey), "nobody knows anything for sure" about who he, she, or it is. As Bloomberg reports, a mystery investor who first appeared a year and a half ago with $450 million of bets on a single day, almost double the market average, is now executing major transactions with increasing frequency, scaring away competitors who can’t figure out when he or she will strike next, traders and bankers said.

At least one European bank’s clients have stopped taking short-term positions in Turkish stocks after concluding the investor is using an algorithmic system in which complex formulas decide trades, while others are avoiding the market until they have more information, a person familiar with the matter said.

“Herif,” or “the dude,” has helped lift the average daily trading volume on the Borsa Istanbul almost 8 percent this year, compared with a 15 percent decline on the main exchange in Warsaw and a 27 percent plunge in Moscow, data compiled by Bloomberg show.

While little was known about the source of these buying sprees, whoever it was had skipped from one local brokerage to the next honing his system and had turned the latest, Yatirim Finansman, into the biggest net buyer on the market by far.

As a result, Yatirim Finansman became well known to Istanbul traders: starting in 2016, it became the talk of the town for its aggressive trades which singlehandedly steered the direction of the stock market, including moves right before last year’s referendum. Traders started referring to the mystery investor or investors, whose identity has never been revealed, as "the Dude."

Nearly two and a half years later, "The Dude" is back with a vengeance because as Bloomberg reports this morning, a single brokerage in Istanbul - the same one that the mystery trader used during his 2016 rampage - "has been placing outsize bets on Turkish stocks at a time when less adventurous investors are bracing for a crisis."

Yatirim Finansman was a net buyer of 565 million liras ($105 million) in equities this week, by far the largest bet on the market in either direction and almost tripling the second-most active buyer, according to data compiled by Bloomberg. That’s helped to make the equity gauge a major outlier, up by 3 percent even as the lira plunged by about 6 percent to record lows and bond yields surged to all-time highs.

The mystery algo has returned at a time of economic in Turkey turmoil amid collapsing diplomatic relations between Ankara and Washington over the imprisoned American past Andrew Brunson who has been jailed in Turkey for two years, and whose continued house arrest resulted in sanctions being announced last week against Ankara by the Trump administration.

And while the threat of successively more damaging economic sanctions should Turkey continue to hold him, coupled with soaring inflation as a result of Erdogan's prohibition for the central bank to raise interest rates, has sent almost every asset class in Turkey tumbling... except stocks. The surprising resilience of the Borsa Istanbul in the context of the crashing Turkish lira and record high interest rates is shown below.

Like in 2016, it remains unclear whether the "Dude's" orders on Yatirim Finansman’s come from one individual or a group of investors, and it’s also unclear whether the source of the flows now is the same as before. Citing the confidentiality of its clients, Yatirim Finansman predictably declined to comment,

However, what we do know is that it is unlikely that the "trader" is an ordinary human. The former CEO of Yatirim, Seniz Yarcan, provided some details into the trades in 2016, telling Dunya newspaper that the abnormally large trades were “not an investor, but a big, new fund investor profile that trades with algorithms." This was confirmed at the time by Isik Okte, an investment strategist at TEB Invest/BNP Paribas:

Borsa Istanbul moved its servers to a new data center [in 2015] in the hope of attracting business from automated traders before it restarts its long-delayed initial public offering. HFT firms often place their servers in the same center to get the fastest possible connection to an exchange’s computers. Okte said he’s convinced the unknown investor is doing just that.

This algo guy just discovered a new market and he’s running his own show because there’s not enough competition, but it will come,” Okte said. “We are in the very early stages, but we know from developed markets that machines always win this game.”

But whoever is behind the HFT algo, they have a clear mandate: keep the market propped up. The bulk of the Dude’s trades this week was directed at the nation’s biggest private bank.

It bought a net 96 million liras worth of shares in Turkiye Garanti Bankasi AS. That was followed by investments in petrochemicals producer Petkim, steelmaker Kardemir, defense equipment producer Aselsan and another steelmaker, Erdemir. Its biggest net sales were in Halkbank, a state-run lender facing the prospect of a fine from the U.S., and media conglomerate Dogan Holding.

Another notable divergence: the positive impact of the "Dude" on the local stock market matches that of central banks, and despite being vastly outnumbered, his dominance remains: of 48 Turkish brokerages tracked by Bloomberg, 31 have been net sellers this week.

The biggest net sales came via Is Yatirim, Yapi Kredi and Merrill Lynch. Following Yatirim Finansman on the buying side were Credit Suisse Istanbul and Deutsche Securities.

And just like ordinary investors now praise central banks for propping up markets and making a mockery of price discovery, so the Turks are delighted that "The dude" abides:

The Turkish stock exchange has welcomed the larger trades via Yatirim Finansman and its mystery investors.

“This ‘dude’ is buying from our market, why should we be concerned?” bourse Chairman Himmet Karadag said in an interview with Bloomberg last year. “He is doing good stuff.”

Still, every artificial manipulation can only last so long, and in the case of Turkish stocks, it is only a matter of time before Turkey's economic collapse overpowers even this remarkable algo. After a 40% plunge this year, Turkish stocks are trading near a nine-year low in dollar terms. But the real risk for Turkey is not whether or not the "Dude" continues soaking up all the selling, but whether that "Other Dude", executive president Erdogan, remains in charge of the economy, the central bank and ultimately, the market, which has just sent the Turkish lira to a new all time low, plunging more than 30% YTD.

Comments

COSMOS Bud Dry Thu, 08/09/2018 - 17:38 Permalink

Same thing was going on in Eastern Europe a few years back and the short sellers and currency speculators ie GOLDMANITES got shafted hahaha.  If I remember correctly the governments only processed small transactions and left the big speculators high and dry.  I believe they were blaming the slowdown on power outages or computer problems lol.  But I guess the MYSTERY DUDE algo is a lot more sophisticated.

In reply to by Bud Dry

lock-stick Adolfsteinbergovitch Thu, 08/09/2018 - 16:35 Permalink

It's all ONE SICK, PATHETIC SPAMMER!!!

•• Adolfsteinbergovitch ("I TORMENT THE WOMAN WHO SUCKS DICK!")

•• lisa.roy39  ("I SUCK DICK ON THE INTERNET FOR LAND ROVERS!")

•• MoreSun (whacked, OH SO WHACKED!!)

•• Free This (ABOVE, in all his 7th grade glory - JACKASS  as new icon!)

•• roea.rita ("I SUCK DICK ON THE INTERNET FOR LAND ROVERS!")

•• Cryptopithicus Homme (bitcoin spammer - imaginary "friend")

•• Leakanthrophy (PORN for Jesus!)

•• 07564111 ("I PRETEND I DON'T KNOW ANY OF THEM!")

•• Africoman

•• Sanctificado

•• beemasters

•• PrivetHedge

•• Cheolli

•• bobcatz

dozens and dozens and dozens of banned log-on's -- more than seven years!

 

....and all the while, the pathetic little SPAMMER sits in his leaky, moldy, smelly single wide in Western New York, surrounded by garbage and dirty clothes, trying to find his dick amidst rolls of fat, talking to his ACTION FIGURES and wondering where his life went.

In reply to by Adolfsteinbergovitch

Adolfsteinbergovitch lock-stick Thu, 08/09/2018 - 17:16 Permalink

Hey fuckstick, i was wondering if you ever worked for the Stasi or any other public interest company. Your spidey sense work wonders, but it is hopelessly wrong. How many dissidents did you execute? Because there must have been a few mistakes... Anyway i hope nobody looked at it to closely you know. That would have been a shame for your ambitions and retirement fund.

In reply to by lock-stick

DeusHedge Thu, 08/09/2018 - 15:11 Permalink

"from everything I’ve read since her arrest last month, it seems the Maria Butina saga is basically a sensationalized click bait story meant to smear a steady stream of Republicans and NRA members she reportedly encountered over the past few years. I wonder which prominent Republican political figures she hasn’t come across?"

no significance here

xoxo _9o320]

Dragon HAwk Thu, 08/09/2018 - 15:18 Permalink

Gosh who has enough money to keep a whole countries stock market propped up, and where is his printing press located,   or maybe  where are all the Derivatives written down is a better question.

Blue Steel 309 Thu, 08/09/2018 - 15:27 Permalink

What is more plausible? That this pastor was a spy, or that Turky risks sanctions, strategic insecurity, and more for the sake if unjustly persecuting a Christian?

 

I think the severity of the US response lends more credibility that he was a spy, rather than the USA all of a sudden finding morality and loyalty to a citizen in this one isolated incident.

 

Edit: what was implied, but I think many missed, was that the US often does nothing when these types of incidents occur, and that the US is extremely selective when applying any sense of morality in its foreign policy. Propaganda Propaganda Propaganda. Whenever dealing with an issue the MSM is presenting, always consider you are being led to the the desired thought or thought process.

NEOSERF Thu, 08/09/2018 - 16:13 Permalink

Gotta be Putin...he sees the opportunity to support a fellow dictator, smash Nato and own the Strait of Gibraltar while increasing the flow of Syrians into Europe accelerating its immolation...this is called STRATEGY folks.

Kan Thu, 08/09/2018 - 17:07 Permalink

Well the process is: F the economy, cause economic hardship to the most extreme level, swoop in and buy up all assets 1/100 the cost.  Fix the economy.

In venzuela's example: starve the rebels(people) who want/took their resources back like they did the native Irish, in the created potato famine genocide.   Which also worked very well on the Palestinians.   I wonder if they have a group of people they are going to move into Venezuela like they did in ireland, palistine, EU, ukraine?? hmm....  I know where they can get 36million illegal invaders that know how to get that job done.

 

I guess they could Bolsheviki invade them... Well they do employ the kurds, it could happen.

SmittyinLA Thu, 08/09/2018 - 17:27 Permalink

If you could print unlimited quantities of fiat money what would stop you from buying up all public assets on the planet? Aside from Russian nukes nothing.

katagorikal Fri, 08/10/2018 - 06:04 Permalink

Yet another not-so-stealthy fascist nationalization
by a central bank printing money from thin air.

If at first TRL don't succeed,
TRY, TRYY and TRYYY again.