TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

Rising Local Interest Rates Trigger Selloffs
" The BIST100 faced harsh selloffs yesterday due to increasing TRY time deposit rates, the prime alternative and nemesis to stock markets. BIST100 slipped 1.8% to 8014, with a turnover of TRY 141.4bn, flirting briefly below the critical 8k level. EU markets on the other hand were down around half a percent.
" The Industrials led the selloffs, losing around 2%, together with the Energy stocks, while the Mining stocks were the hardest hit, due to the drawback in Gold prices, losing 3.22% of its sparkle.
" Today, we expect a slightly negative opening at the BIST, on the back of the new RRR announcement by the CBRT.
" SISE, YKBNK (thanks to BOFA's report) and PGSUS (due to the opening of 2 new runways) were the most and only blue-chip stocks that manged to close in the green, whereas EKGYO, ODAS and KOZAL were the most sold.
" Currently, the TRY is trading flat against both the USD and the Euro at 26.95 and 28.97, respectively, while the DXY is trading slightly lower at 104.57, ahead of today's ECB meeting. The 2yr rates fell by 87bps to 24.03%, while the 10yr rates rose by 162bps, to 22.38%.
" On the commodity front, Brent is trading higher just below the USD 92 level, whereas ounce and gram GOLD prices are flat at USD 1910 and TRY 1655, respectively.
" The US August inflation rates rose 3.7% on an annual basis, a tad higher than the expected 3.6% forecast, while m/m, prices increased 0.6%, in line with expectations. The Fed's key indicator, Core CPI, which excludes Food and Energy, rose 0.3% vs the expected 0.2% m/m, but came in line with expectations at 4.3 on an annual reading. We see the results broadly in line with expectations. Sliding core inflation proves that the FED is on track in coping with inflation. We do not envisage any rate hike by the FOMC on September 20th. ECB on the other hand, despite all the talks of a recession, will be obliged to hike by 25bp today in our view as the EU inflation is almost 2pp above that of US but the policy rate is still short of matching the inflation line.
" Fitch has revised upwards its 2023 global growth rate to 2.5% from 2.4%, but lowered it for 2024 to 1.9% from 2.1%, due to the "slump in China's property market casting a shadow over global growth prospects, just as monetary tightening increasingly weighs on the demand outlook in the U.S. and Europe." For Turkey, Fitch revised upwards its 2023 growth rate to 4.3% from 2.5% and expects growth to be at 3% and 3.4% for 2024 and 2025, respectively.
AGENDA:
" On the local front, the Weekly Foreign Net Stock/Bond Holdings will be released, while the ECB is not expected to make any changes to the interest rates, according to the Bloomberg survey today, to be followed by Lagarde's speech. Elsewhere, the US will be disclosing its Weekly Jobless Claims figures, PPI and Retail Sales figures.
CORPORATE:
" BANKING (NEGATIVE): The CBRT disclosed new RR with regards to the FX-Protected Account according to maturities. As such, the rates will be 8% for maturities for 1-3 months, and 25% up to 6 months, from the previous 15% rate. In our view, Banks will need to keep 10% of their exchange rate-protected deposits in the CBRT while giving loans and earning returns. Or they will increase the interest they pay on TRY deposits and take deposits from a subsidiary bank and pay them to the CBRT. A third option will be, they will give higher TRY deposit interest to channel the account holder to TRY deposits. Whichever you look at it, it is negative for the sector, as TRY 300bn liquidity is expected to be drawn from the market, according to BloombergHT. Among the private banks as percentage of shareholders equity; we expect the downbeat impact will be harsher for GARAN and YKBNK while somewhat milder for AKBNK and ISCTR.
" AFYON - Disclosed that electricity production has started with the completion of the GES investment.
" ASTOR - Disclosed that company signed a 5.5-million-euro contract with KONTR for the purchase of Power Transformers.
" ASTOR - Disclosed the company signed a $4.6mn Power Transformer sales contract with a firm in Iraq.
" ARCLK - J.P. Morgan Securities plc, BNP Paribas, Citigroup Global Markets Limited, and HSBC Bank plc were authorized for the planned overseas bond issue in Regulation S format.
" ALARK - Disclosed the company's subsidiary Alarko Agriculture signed a Share Transfer Agreement to purchase 80% of the shares of Genseed Seeds for 3.7 million dollars.
" BVSAN - Disclosed that the company signed a contract with a firm in Europe for the production and delivery of process cranes worth € 775k.
" CWENE - Disclosed an agreement was reached between the company and a customer regarding a $1.7mn solar panel product.
" ELITE - An agreement was reached with Walmart Inc. for the sale of Elite Naturel Organic products.
" KONTR - Disclosed that within the company's affiliated partnership Pomega, a loan agreement of $80mn was signed in cooperation with TSKB and VAKBN, within the scope of the 2nd phase investment of the special sector prismatic lithium-ion battery cell, battery, and energy storage products giga production factory, the 1st phase of which was completed.
" KTLEV - The share buyback program was updated, and the number of shares was revised to 5mn.
" RAYSG - Disclosed that the premium production increased by 152.9% to 7.1 billion TL in the period from January to August.
" SASA: Disclosed that it was eligible for an Investment Incentive Package for its Adana factory with an investment of $400mn and total annual capacity of 402,500 ton, expected to be completed at 3Q23.
" TURSG - Disclosed that the premium production increased by 127% to 33.5 billion TL in the period from January to August.
" GIPTA: Shares will start trading today at the BIST.



 TFG Istanbul Menkul Değerler A.Ş.
  www.tfgistanbul.com/arastirma-raporlar
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