· DRAGHI SPEAKS; EYE ON POLICY > Risk sentiment remains weak with concerns re global growth outlook, as seen from declining energy & commodity prices. Today, ECB account of Dec MPC meeting will be published and Draghi will speak. Slowdown in global growth fuelling expectations of further ECB stimulus after measures announced in Dec disappointed mkts.
· CBRT SURVEY > CBRT will announced monthly survey of expectations today, where inflation forecasts are likely to move higher with currency weakness & higher-than-expected Dec inflation.
· DEBT PAYMENT SCHEDULE > Both domestic debt redemptions and external debt payments in the first quarter higher than that in the remainder of the yr. Treasury will redeem TRY 16.4bn and TRY 14.2bn in Jan and Feb => highest levels of the yr. While the Treasury will issue a 11m bill next week, focus will be on demand on 25-26 Jan. Any weakness likely lead to further cause stress in local bonds. Treasury plans to issue USD 4.5bn of eurobonds this yr but can postpone this for a couple of months, as the first sizable eurobond redemption is in Mar. Furthermore, total external debt payment of pvt sector in 1Q is also slightly above its trend. Avg monthly payment of corporates in 1Q is USD 1.5bn; for financial companies its USD 4.6bn.
· USDTRY RECOVERED A BIT > eased towards support @ 3.00 during the day on improving global risk sentiment on China but nevertheless opening above 3.02 today with reviving worries over global outlook. We calculate REER @ 95.8 with basket TRY @ 3.16, significantly above its low at 89 in Sep => suggests room for further weakness if global risk sentiment remains depressed.
· BONDS TO OPEN WEAKER > While fundamental risks re growth-oriented economy policies of the govt remains, there was some investor interest after bond yields reached highs attained during sell-off periods in 2014 and 2015. However, yields are more likely to move higher today with a sl weaker TRY and negative global risk sentiment.
· BIST100 > Expect sl –VE open on weaker global sentiment. Support 71500 (-1.4%)
· CCOLA (BUY, TP:TRY49.5) > 4Q15 Unit sales > disappointing int’l figures, dom. sales came above exp due to base effect and post-election recovery in consumer sentiment => Domestic sales up 19% (above our 12% exp) to 116.0m. FY15 unit sales up 2.6% to 593m. # of purchases increased 6.4% y/y on higher immediate consumption packages sales which are margin-wise lucrative. Int’l sales down 2.8% y/y, much weaker than our +4.0% exp. due to weak vol. growth in Pakistan (-3.7% realized vs 8.0% our est.) & Kazakhstan (-12.4% vs -2.0%). Pakistan => price competition continues but CCOLA did not engage in price war and kept focus on profitability. Overall mkt is growing in low double digits. Kazakhstan => 4Q15 consumption –VELY effected by 45% currency depreciation. Azerbaijan => double digit contraction observed following local currency depreciation. Iraq => unit sales increased 12.4% thanks to high consumption in Southern region. Negative.
· YKBNK (BUY, TP:TRY4.15) > court rejects suit filed by the bank against a competition board fine re promotions to payroll accounts dated 2011 => amount in question only TRY10m and already paid. Neutral.
· ARCLK (HOLD, TP:TRY15.9) > obtained investment incentive certificates for investments worth TRY1.1b for modernization of its 7 production plants over the next 4 yrs, that will provide customs duty exemption, VAT exemption, 2 yr social security premium support for employer's share & corporate tax deductions. Positive.