Turkish Daily Report

STRATEGY 

·        Technical outlook for BIST100 worsened yesterday:

o   BIST100 broke main USD support at $23.2k and closed at the lowest print since June 23, 2009 ($22.8k) – new USD support at $23.3k , $23.2k becomes short-term resistance;

o   BIST100, on TRY basis, broke interim support at 69.8k but closed above main support at 69.2k (low print from Dec 14)

·        Turkish equities (-6.9%) are outperforming EM and EM EMEA peers by 5.9% and 9.7% YTD on MSCI index basis.

·        As we write, Asian EM equities are printing new daily lows with all indices in negative territory (Shanghai -2.5%; Sensex -0.6%; Kospi -0.3%)  USD/EUR equal weight TRY basket is down 0.1% (3.1920 → 3.1876) from BIST close last night. We expect a slightly negative opening for BIST, especially with the recent +2% sell-off in Shanghai.

EM EMEA is being sold 13.4% in 2016 with MSCI Russia and South Africa down 14.9% and 16.5 respectively.

STRATEGY 

EM EMEA is being sold 13.4% in 2016 with MSCI Russia and South Africa down 14.9% and 16.5 respectively.

MSCI Turkey is down only 4.6% YTD.

·         Last week, MSCI Turkey (-0.3%) outperformed EM EMEA by 6.4%, Russia by 10.9% and South Africa by 6.6%;

·         Turkey is outperforming EM by 6.3% in the first 10 days of trading for 2016;

·         Turkey is outperforming India by 3.2% YTD and is the second best-performing major EM this year after Indonesia (-2.5%)

Along with energy commodities’ collapse, we attribute Turkey’s relative EM and EM EMEA outperformance in 2016 to expectations of macro-prudential easing by the BRSA. (36.9% weight of BIST30 is Banks.)

Turkish Daily News - 15/01/2016

MACRO

·         Volatility continues > Risk sentiment remains weak, despite some short-covering yesterday, with concerns over global growth outlook on disappointing China data. At home, October unemployment rate will be released.

·         Big deterioration in inflation expectations > In CBRT's monthly survey, expected inflation after 12 and 24 months surged 36bp and 26bp m/m to 7.92% and 7.12% in Jan. Normally this should put tightening pressure on CBRT at its MPC next Tuesday. However, the govt already revised its inflation forecast for this year to 7.5% in MTP from 6.5% => CBRT is less likely to react to this deterioration. We think this risks further bear steepening of the curve and weaker TRY.

·         Some inflow into bonds > In the first week of the new year, ending Jan 8, there was USD 0.3bn inflow into bonds, excluding repos and local banks’ branches abroad => first inflow after 5 weeks of uninterrupted outflows and the highest weekly inflow in last 25 weeks => suggests some investor interest building, as 5y bond yield rose to as high as 11.5%, its peak attained both in 2014 and 2015. Eurobonds attracted a minor USD 0.1bn while equity portfolio of foreign investors dropped by a further USD 0.2bn.

Turkish Daily Report

MACRO

·         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.

Daily Bulletin - Wed Dec 30, 2015 - BIST 100

STRATEGY 

·    Main agenda of Turkey today is the expected snow storm in Trakya and Marmara regions – Turkish Airlines cancelled 142 flights out of Ataturk and Sabiha Gokcen airports scheduled for today and tomorrow.

·   Prime Minister Davuoglu will meet CHP leader Kilicdaroglu to discuss the articles of the New Constitution and 2016 budget today. These are scheduled talks with every political party leader represented in the Parliament except pro-Kurdish party. Press conferences after the meeting today will be closely followed – expectations for something concrete from today’s meeting are extremely low since CHP leader Kilicdaroglu has repeatedly stated that his party is against any form of Executive Presidency.

·    BIST100 lost 0.4% USD in sluggish trade yesterday despite Sabanci Holding (SAHOL) share repurchase announcement --- SAHOL holds the 6th largest weight in BIST100 at 4.9% and rallied 1.8% USD yesterday. Manufacturing index was the main reason for the weakness in BIST with 0.9% USD sell-off. Both EM and EM EMEA were flat yesterday.

·        BIST100 is trading below 50-100-200 dma in both TRY and USD basis: ‘’SELL’’ formation continues. 22-dma for both TRY and USD are short-term support.

• On TRY basis; 22-dma = 73.6k; last night close = 73.9k
• On USD basis; 22-dma = $25.2k; last night close = $25.4k

Daily Bulletin - Fri, Sep 4, 2015‏

STRATEGY

 

·    Global equities are being sold pre-U.S Aug NFP release. Nikkei (-2.2%), Hang Seng (-2.1%), India Sensex (-1.7%) and Korea Kospi (-1.5%) lead the sell-off.  MSCI Asia Pacific index is trading down 1.2%. S&P futures are pointing to 0.8% down opening.

 

·    EM FX sell-off is intensifying with stories in the Brazilian press about the make-up of the government (BRL -4.3% vs USD this week) – CEEMEA currencies also under pressure this week with RUB (-2.8%) , ZAR (-2.8) and TRY (-2.3%)

 

Daily Bulletin - Thu, Sep 3, 2015‏

Yesterday was a disappointing day for TRY investors carrying long positions. On a day, when Moody’s stated base case for Turkey is keeping investment grade rating, TRY-denominated assets could not rally.  Moody’s commentary could not even sustain a 5-minute short-covering rally in BIST. BIST closed the day flat, TRY basket and yields were higher.

 

·    Rising geopolitical risks (kidnappings in Baghdad + PKK terrorism), Koza Ipek Holding investigations and overall EM weakness may be perceived as the main reasons.

 

·    Turkey’s risk premium, 5-year CDS rose 8.1% in 2 trading days = worst performance in EM.

 

·    This morning, we expect a slightly higher opening for BIST equities just based on S&P500 close from last night. TRY basket is trading @ 5-day highs at 3.13 and traded above 3.14 yesterday despite positive Moody’s commentary.

 

·     August CPI print will be released at 8:00am London time – consensus = 0.11%. Expect tight range trading until U.S August NFP tomorrow.  

  

·     BIST100 short-term technicals:

• TRY : Support = 72.8k / 72.0k ; Resistance : 74.5k / 75.3k ; Last trade : 73.7k
• USD : Support = $24.8k / $24.5k ; Resistance : $25.2k (10-dma) / $25.9k ; Last trade : $25.0k

 

Turkish Report Daily

·        CBRT to announce 2014 Monetary & Exchange Rate Policy @ 10am local> Key will be its game plan against depreciation on the ccy. CBRT had said it would peg the 1-wk repo auction to TRY liabilities => details? => CBRT will likely limit cheaper funding for every bank to a certain ratio of their TRY liabilities. Currently CBRT provides a total TL 6bn of the 1wk repo. Meanwhile, the CBRT sticks to its min FX sale auction> After selling $400m last Friday & total $ 930m for the whole wk, CBRT stuck to its prev’ly announced min FX auction size of $250m y’day. Min auction size is also @ same lvl today but will decline to $ 50m tmrw (insert hair pulling scene). TRY u/p peer EMs by 2.6% over the last wk. If the CBRT gov repeats earlier rhetoric = “The Committee assessed that the current stance of the monetary policy => appropriate to contain inflationary risks,” then expect to see further pressure on ccy & rates.  

 

·        EKGYO (NR) > Bought back 16.5m shrs (0.086% of free float, last 3m avg daily trading vol 76.7m shrs) @ TL 2.14-2.15. Total cost @ TL 35.44m.