TFG Istanbul Morning Report (TFG Istanbul Menkul Değerler )

• As we have become all too familiar with, and noted in our daily report yesterday as well, the market opened on a positive note, but ended the day 1.45% lower at 7491.94, on a record turnover of TRY 224.9bn. The indecisive trading at the BIST was as if taken from Katy Perry’s “Hot N Cold” song, interchanging between red and green, and leaving investors panicked and indecisive whether to hit the “red” or the “green” button. The volatility was caused by the surprising, unexpected and unthinkable 750bps rate hike from yesterday’s MPC, taking the policy rate to 25%, its highest level in 4 years. Please note that the policy rate was at 8.50% when the new economy team took office.
• Today, though we expect a negative opening, especially in the Industrial markets, and due to the negative mood in the Asian markets ahead of Jerome Powell’s speech today at Jackson Hole, the bold move from the CBRT yesterday was a firm signal to doubters that the new economy team means business regarding both a normalization in the economy, and is determined in its fight against inflation, and we can now soundly put aside the former Unorthodox New Economic Plan aside. This new bold action by the CBRT is also expected to be welcomed by foreign investors, and we expect to see an uptick in the current foreign ownership of Turkish stocks rate at 31.13%.
• The Banks were yesterday’s biggest and only winners by the surprise rate hike, closing 8.46% higher, thanks in part to the sharp drop in the country’s CDS rates well below the 400 level, currently at around 385, whereas the Industrials and of course the REITs, were the most negatively impacted sectors, as the Industrial stocks will have to pay higher interest on their loans.
• The TRY appreciated by nearly 5.50% and 6% against the USD and the Euro, which may deal a blow to local export companies, and discretionary consumer spending sectors such as technology and furniture.
• GARAN, AKBNK and YKBNK were yesterday’s biggest movers among the blue-chips, as opposed to EKGYO, PETKM and TOASO shares.
• The TRY has currently weakened to 25.95 against the USD, and weaker against the Euro at 27.99 level, whereas the DXY has soared above the 104 level to 104.22. The 2yr and 10yr Bond rates both rose by 312bps and 34bps to 21.88% and 19.29%, respectively.
• On the commodity front, Brent is trading higher at USD 83.31, whereas ounce GOLD is trading slightly lower at USD 1915, gram GOLD is higher at TRY 1598.
• Last week, Foreign Investors were net SELLERs of USD 75.6mn Turkish EQUITIES, but net BUYERS of USD 1.5mn BONDS, whereas the FX-Protected Savings Accounts saw their slowest rise of USD 1.6bn TO try 173.9bn.
• JP Morgan has revised its year-end policy rate expectations to 35% from 30%, thus seeing an additional 100bps rate hike in the upcoming meetings, as well its YE inflation rate to 62% from 57%, forecasting the inflation rate to peak at 70% in May 2024.
• According to the Official Gazette, medical exam costs have been increased by 50%. We may see this increase positively onto MPARK shares.
• Boston Fed President, Susan Collins commented yesterday that the central bank may hike interest rates further and will likely need to keep rates elevated for an extended period even if it does decide against another increase in the coming months.
AGENDA:
• On the local front, the Real Sector Confidence figures, Foreign Tourist Arrivals, Capacity Utilization Rate, and Bloomberg Aug. Turkey Economic Survey will be released.
• On the international scene, the German IFO business climate, Lagarde’s speech, and of course, Fed President Jerome Powell’s speech at Jack Hole will be monitored, which investors hope will offer some insight into the likely path of interest rates in the future.
STRATEGY:
• The 750bp policy rate hike to 25% is set to impact consumer discretionary sectors negatively not only due to less affordability through credits but also due to strengthening of the TRY as that would create a competitive disadvantage for Turkish exporters from a pricing point of view. We expect TRY time deposit rates to shoot up to above 40% levels next week, which is likely to be counterbalanced by the increase in interest rate cap on TRY loans to 56%. Yet lack of loan originations will deter a visible improvement in core spreads for this quarter. Still, due to the continuation of pledged switch to rational policies we expect foreign inflow into banks to continue despite fundamental negatives on the sector today as well. In all, refrain from consumer durables, non-food retailing and autos, but continue to keep overweight positions in banks and large conglos.

 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.