On the first day of the week, positive reports from international investment banks and positive expectations for the sovereign rating pushed up TRY asset pricing and indices in Borsa Istanbul rally following foreign investor hopes.
This week is quite critical for TRY assets. On January 11th, Investor Day meeting will be followed by Moody’s Turkey report. While these two important agendas increased the appetite in the markets, positive reports on TRY stocks from international banks caused the indices to rise rapidly.
Borsa Istanbul started the second week of the year with strong purchases and a rise. This week, there will be an investor meeting of Central Bank Governor Gaye Erkan and Treasury and Finance Minister Mehmet Simsek on January 11 in New York, followed by a Turkey rating decision by international credit rating agency Moody’s on January 12. On top of the positive expectations created by these two important events, positive reports from international banks on the first day of the week accelerated the rise in indices. The rise in the banking index exceeded 7 percent during the day, while the commercial and financial indexes rose by more than 3 percent. Market experts emphasized that things are generally going well for TRY assets, normalization is taking place and foreign investors also take these points into account.
Although market experts pointed out that the indices moved so fast in low-volume transactions, they also pointed out that there was a positive image. Borsa Istanbul BIST100 index closed the day at 7818.89 points, up 2.49 percent. While the banking index rose 8.91 percent, the financial index rose 4.73 percent, the transportation index rose 1.32 percent, the holdings index rose 2.35 percent and the trade index rose 2.63 percent. While Akbank and Yapi Kredi shares were at the ceiling, other banks closed the day at levels close to the ceiling price.
More than 200 participants expected for the Investor Day
On January 11th, the first Investor Day meeting in a long time will be held in New York. The meeting, which will be held at JP Morgan’s New York headquarters, will begin with a presentation on monetary policy by CBRT Governor Hafize Gaye Erkan. Minister Simsek will also make a 45-minute presentation titled “Fiscal Policy and Treasury’s Financing Outlook”. At the end of the meeting, Erkan will answer questions moderated by Burak Kaynak, Head of JPMorgan Turkey Desk. The meeting is expected to be attended by more than 200 senior representatives from the world’s largest mutual funds with a total size of $50 trillion. Blackrock, Vanguard, Fidelity, UBS, Morgan Stanley, JP Morgan, Goldman Sachs and PIMCO stand out among the institutions that will participate in the “Investor Day” in New York. The second “Investor Day” is planned to be held in Turkey this year.
CDS signals a rating upgrade
After the Turkish markets close on the last trading day of the week, the rating decision of Moody’s, which skipped its assessment of Turkey on December 15, will be announced. Although there is a possibility of another pass, the market expects Moody’s, which evaluates Turkey 6 notches below investment grade, to at least change the outlook to positive and, at best, to raise the credit rating by one notch. “Wage increases seem likely to put upward pressure on inflation while maintaining a tight monetary stance. However, we assess that the probability of the outlook being revised to positive is above 50 percent” experts said. They emphasized that the movement of Turkey’s 5-year bankruptcy risk premium CDS between 280-300 basis points also strengthens the possibility of a rating increase considering similar countries.
‘Buy’ recommendation for private banks
Yesterday, Bank of America published a report titled ‘Turkish banks back on the radar’ and stated that investor interest in Turkish banks has increased after years. In the report signed by Bank of America Analyst David Taranto, it was emphasized that large investors have recently dominated the stock market inflows, while the common view of foreign investors is that banks will best keep up with Turkey’s normalization theme. “Bullish investors believe that the credit rating is at the beginning of an upswing, as in the early 2000s,” the BoA report said. On the other hand, valuations remain a problem for bearish investors. After interest rates peaked, we expect the fundamental story of banks to accelerate after the first quarter.” In the BoA report, it was also stated that there was a rapid recovery in CDS and bond markets and that stocks would follow, and a ‘buy’ recommendation was given for Akbank, Garanti, İs Bankasi and Yapi Kredi shares. Two US investment management companies, PIMCO and Vanguard, expressed their positivity about TRY assets as well. Pramol Dhawan, Managing Director and Global Head of Emerging Markets at PIMCO, told Anadolu Agency that they are positive on Turkish assets, especially local currency assets, due to the tightening of fiscal conditions to rein in spending and control inflation.
Citi gives ‘buy’ recommendation to food retailers
Another international bank Citi’s report maintained a positive attitude towards Turkish food retailers. In the report, it was stated that the bank updated its models by taking into account the minimum wage increase and macro data, and accordingly, sales/EBITDA expectations increased by about 4 percent. Emphasizing that it is still fundamentally constructive on the Turkish food retail sector, Citi thinks that the sector is likely to stand out as a defensive sector if slowing credit growth and the high-interest rate environment lead to a decline in consumption. Citi maintained its ‘BUY’ recommendation for all of them, while raising its price targets for BIM from TRY430.0 to TRY450, for Migros from TRY460.0 to TRY470 and for ŞOK Marketler at TRY93.0.
