What matters on Tuesday, October 25

The payment period for Value-Added Tax (VAT) returns for exports is on average six to seven months while the total amount has reached TRY 500bn, according to exporters. They said their receivables have suffered from ‘erosion’ due to high inflation and companies have been mistreated. Exporters also stated that delays in the payment of VAT returns have further increased the resource problem for businesses in a period when problems have arisen in access to financing due to the contraction of loans. Exporters’ associations have applied to the Treasury and Finance Ministry and Trade Ministry to accelerate the payment of the VAT returns.

A full investigation of the coal mine explosion in Bartin is being carried out and the current state of all mines across the country are being reviewed, according to President Recep Tayyip Erdogan. Speaking after the Cabinet meeting, President Erdogan also announced the first vehicle produced by TOGG will be completed on October 29, the Republic Day of Turkey. In the meantime, the support package that will be provided to relatives of mineworkers who lost their lives at the coal mine explosion in Bartin has been included in the legislative proposal discussed at the Parliament’s Planning and Budget Commission.

Turkey’s benchmark stock index ended yesterday at a new record high of 3,977.51 points, up 1.09%, or 42.89 points, from the previous close. During the afternoon session, BIST 100 exceeded 4,000 points for the first time. Investors’ demand for Turkish stocks increased with equity seen as a hedge against surging consumer prices. The index’s lowest value during the day was 3,939.73 points, while its daily high was 4,008.80. The total market value of the BIST 100 was around TRY 3.1tr by market close, with a daily trading volume of TRY 76.8bn. Risk appetite has increased globally per expectations that the Federal Reserve’s ‘ultra-hawkish’ monetary policies have come to an end, according to analysts. They said 3,850-3,900 points will be the support level and 4,050 points will be the resistance level for the BIST 100 index, in technical terms.

Despite a record on the stock exchange, foreigner’s share in Borsa Istanbul fell to 31.5%, hitting an all-time low, according to daily DUNYA. Moreover, their share in banking stocks considerably decreased. Non-residents’ share in Halkbank has fallen from 36.64% to 1.62% while their share in Vakifbank has dropped from 68.65% to 3.18% as of October 24, as compared to December 31, 2019. Foreign investors’ shares in private banks also declined in this period. Although the BIST Banking Index has increased by nearly 150% on a TRY basis over the past three years, it has lost 22% in USD terms.

Central Bank Governor Sahap Kavcioglu will hold an information meeting on October 27 to launch the Fourth Inflation Report for 2022, according to a statement from the Central Bank. Kavcioglu will also answer questions by the press and economists at the meeting, which will be broadcast live on the bank’s website, and its official Twitter and YouTube accounts. The year-end inflation was revised by 17.6 points from 42.8% to 60.4% for 2022 in the previous inflation report.


The seasonally adjusted confidence index increased by 0.9% in the services sector, 3.0% in the retail trade sector and 2.8% in the construction industry in October, compared to tge previous month, according to the Turkish Statistical Institute (TurkStat).

The Real Sector Confidence Index rose by 0.4 points to 103.3 in October, month-over-month, according to the Central Bank.

The Capacity Utilization Rate dropped by 0.5 points to 76.9% in October, as compared to September, according to the Central Bank.

The Treasury and Finance Ministry will reissue a 1-year (539 days) maturity semiannually fixed coupon bond, and a 10-year (3,570 days) maturity semiannually CPI (Consumer Price Index) indexed government bond.


>> The Treasury and Finance Ministry borrowed TRY 17.7bn during the new issuance of a 10-year maturity fixed coupon government bond on October 24.

>> The Financial Services Confidence Index dropped by 2.5 points to 164.3 in October, compared to the previous month, according to the Central Bank.

>>A TRY 5.62bn debt was restructured in September under the Framework Agreements on Financial Restructuring (FYYCA), according to the Banks Association of Turkey (TBB). Thus, TRY 115.9bn in debt flr 357 companies has been restructured as of the end of September. 


>> Is the increase in net E&O before elections a coincidence?

Our Eco Analysis Columnist Alaattin Aktas examines the hike in net errors and omissions (E&O) in the Turkish budget, including the surge in the election period.

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