Turkey Wake-up call: Macro, Political and Equity News, 10th November

BIST jumped 3.32% yesterday as the strength in lira following the weekend changes at the top economic posts as well as the global market euphoria on reports of progress in covid vaccine lifted Turkish stocks alike. Index opened gap higher and moved to 1,225 levels before gaining further traction on vaccine news after 2:30PM. Banks were strong with the 6.33% surge in their sector index. Aviation stocks, MAVI, BRISA, GOODY, EREGL, TUPRS, SAHOL, and KCHOL topped the non-bank gainers while Koza Group names, healthcare stocks, INDES, TATGD, SOKM, OTKAR, and TOASO were among the rare decliners for the day. Last night, President Erdogan accepted Treasury & Finance Minister Albayrak's resignation and appointed Lutfi Elvan to the post. Mr. Elvan was a former deputy prime minister, development minister and transport minister who served in administrations under various AKP governments. Coming to this morning, our macro agenda involves the unemployment statistics for August'20 to be released at 10AM local time. Headline unemployment had been unchanged on a sequential basis at 13.4% in July while remaining slightly below the 13.9% level for the same month of 2019 although the latter was mostly attributable to the 3.5pp yoy decline in the labor participation rate to 50.3%. Meanwhile, seasonally-adjusted unemployment had improved 0.5pp on a sequential basis to 13.6%. Separately, the Treasury will issue 2-year fixed coupon bonds and reissue 5-year fixed coupon bonds in double domestic borrowing auctions. Domestic redemption for the week is a hefty TL23.51bn. We foresee a slight negative open for the BIST given the overnight reversal of the rally in global markets. S&P futures are down 0.6% in early trades on top of the 1.7-2.1% overnight losses in main indices after the time we left. Asian markets are mixed as they partially catch up with yesterday's strong gains in the Western hemisphere. Lira is stable with USDTRY hovering around the 8.18 mark in early going.