TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

• The sell-off on the BIST continued due to regulatory pressures, coupled with this week’s Presidential runoff, ending the short week on a loss of 3.43% at 4501, and turnover of TRY 54.3bn. Bulk of the regulatory issues have been reversed after the latest closing. Cash advance limitations on credit cards and additional bond buying requirements for fast loan growth are annulled. Market talks on limitation on Custody Bank lending to brokerage houses are denied. So, we expect reactionary buying for today.
• The Banks fell by 3.64%, over the losses were fairly uniform across the board.
• ALARK was the only stock among the blue-chips that managed to close in the positive, whereas KOZAL, KOZAA and EKGYO were the most sold.
• On average, the BIST100 fell by a little over 6%, with the Banks losing over 20% in value after neither candidate was able to pass the 50% threshold to gain the Presidency last weekend. The TRY weakened against the USD by 1.20% last week.
• Today, we expect a positive opening at the BIST, and any support for the main opposition coalition from the far-right ATA party, may further contribute to reactionary buying today.
• As of Thursday’s close, the TRY is trading a tad weaker at 19.83 against the USD, and weaker against the Euro at 21.44, whereas the DXY is flat at 103.10. On the Bonds’ side, the 2yr rates fell by 16bps to 7.97%, whereas the 10yr bond rates fell faster by 174bps to 9.85%.
• On the commodity front, Brent has fallen sharply to USD 74.6, and ounce and gram GOLD are flat at USD 1261 and TRY 1974, respectively.
• Over the weekend, Fed Chairman, Jerome Powell stated “The credit crunch expected in the aftermath of recent bank failures may limit how much the US central bank will need to raise its benchmark interest rate, as officials weigh the need to forgo further tightening.”
• President Biden is expected to meet today to address the Debt Ceiling dilemma with House Leader McCarthy.
• President Erdogan hinted at further interest rate cuts over the weekend from the current 8.5% rate, and the Treasury and Finance Minister stated that the burden of the FX-Protected Savings Account on the budget was TRY 95.3bn.
The ball is in the court of locals, as foreigners capitulate
• As per CBRT statistics, foreign investors divested US$135mn of equities in the preceding week, while registering US$31mn outflow from the bond market. Foreigners disposed a total of US$1.1bn from their equity holdings ytd. Escalation in the TRY deposit rates, the average of which is at 29.2% and one can get as close to 40% if bargains hard enough, increases the opportunity cost of retail investors positioned in the BIST. Last year, the foreign sell-off was counterbalanced by Turkish retail investors inflow, but the surge in deposit rates presents a looming peril on the stock market, which may discourage the domestics with scale, as well. It's worth noting that the foreign share in the free float of the stock market again came down back to 28% levels after surpassing 30% on the back of the election polls in the last one month. In all, it will be a rough ride for the Turkish stock market going forward with locals inclining towards alternative financial instruments coupled with foreign appetite fizzing out.
NEWS FLOW:
• The CBRT disclosed its May “Financial Stability Report” in which it stated that under the framework of the Liraization Strategy, with the aim to permanently increase the TRY share in corporates. It also stated that: While the financial debt/financial asset ratio of the corporate sector has declined to the lowest level of the last 10 years, the positive trend in the liquidity, profitability and debt service indicators of firms continues. Other key headlines of the Report are: While the downward trend in the number of firms using FX loans continues, the firms’ capacity to meet their FX debt through export revenues is increasing; As a result of the targeted loan policy implemented to support potential growth and the current account balance at sustainable levels, the loan composition has changed as intended; The banking sector’s asset quality indicators are improving further; The banking sector has strong FX liquidity buffers; Banks have resilient balance sheet structures; Banking sector profitability continues to support capital.
• ALFAS: Disclosed that it has signed a TRY 17mn solar energy panel agreement with a foreign client.
• EKGYO: Stated that it has signed a development agreement with THYAO worth TRY 3.5bn.
• HEKTS: Disclosed that it has decided to purchase a second veterinary medicine production plant in Ankara at TRY 141.8mn.
• KLMSN: Disclosed that it will increase its registered capital to TRY 350mn from the current TRY 100mn.
• SUNTK: Disclosed that it has ended its share buyback program.
• CCOLA: Will distribute gross TRY 2.95/share dividends today.
AGENDA:
• The local macro agenda will kick-off with the Consumer Confidence figures, and followed by the Capacity Utilization rate, Real Sector Confidence, the MPC meeting, and Weekly Change in Foreigners’ Net STOCK/BOND holdings.
• On the International front, the US will be disclosing the PMI figures, as well as New Home Sales, 1Q23 GDP Growth Rate, Pending Home Sales, and Durable Goods Orders, as well as the FOMC Minutes, whereas the Eurozone will be releasing the Consumer Confidence Levels, and Germany its IFO and 1Q23 GDP growth figure.

 TFG Istanbul Menkul Değerler A.Ş.
  www.tfgistanbul.com/arastirma-raporlar
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                  Yasal Uyarı
 
 Burada yer alan yatırım bilgi, yorum ve tavsiyeler yatırım danışmanlığı kapsamında değildir.Yatırım danışmanlığı hizmeti ; aracı kurumlar, portföy yönetim şirketleri, mevduat kabul etmeyen bankalar ile müşteri arasında imzalanacak yatırım danışmanlığı sözleşmesi çerçevesinde sunulmaktadır.Burada yer alan yorum ve tavsiyeler, yorum ve tavsiyede bulunanların kişisel görüşlerine dayanmaktadır.Bu görüşler mali durumunuz ile risk ve getiri tercihlerinize uygun olmayabılır.Bu nedenle, sadece burada yer alan bilgilere dayanılarak yatırım kararı verilmesi beklentilerinize uygun sonuçlar doğurmayabilir.