Turkey Wake-up call: Macro, Political and Equity News, 05th January

BIST increased 1.27% as the buoyant sentiment in global markets propped up Turkish stocks to a positive start to the new year. The high inflation print could not spoil the mood and the BIST100 index tested a new all-time high of 1,500 in the afternoon before giving back a small part of its gains. Banks fell behind with the 0.67% gain in their sector index amid some institutional selling in GARAN. Koza Group names, OTKAR, REITs, AKCNS, GOZDE, ENJSA, AKGRT, and power generation companies topped the gainers while aviation stocks, GUBRF, DOAS, SELEC, and EGEEN were among the fewer decliners in the BIST100 space. Today, our local macro agenda involves Central Bank's December'20 real effective FX rate due at 2:30PM local time. The CPI-based index is expected to stage some recovery from the 60.55 mark (only a tad above lowest ever print in the series dating back to 1994) for the previous month given ~3.7% appreciation of lira vs the currency basket as well as the 1.25% headline CPI print for December. Separately, Treasury will reissue 7-year FRNs and 10-year fixed-coupon bonds in double domestic borrowing auctions. Domestic redemption for the week is a hefty TL21.14bn while the Treasury has raised TL8.22bn in the double auctions held yesterday. We predict a slight negative open for the BIST as pandemic worries are weighing on the risk appetite abroad and the lira is a bit weaker (USDTRY at 7.4238 vs 7.4128 at yesterday's closing bell). U.S. futures are flat but we note the 0.7-1.2% overnight losses in key American indices after we left while Asian markets present a mixed picture.