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.

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.

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%)