Turkey Wake-up call: Macro, Political and Equity News, 12th November

BIST jumped another 2.91% yesterday as investors continued to flock into Turkish blue chips led by depressed banks and conglomerates. Index opened slightly higher and cruised in the 1,250-1,260 range until around 2:30PM. Things got more exciting after this hour when President Erdogan reiterated his government's commitments to the free market economy and signalled major changes in macro policies following the new appointments to key posts. Markets were jubilated with promises of "a new era" and stocks and lira rallied for the rest of the day along with the sharp drop in CDS rates. Banking index surged 8.88% as especially the big private lenders caught strong institutional bids. KCHOL, SAHOL, TTKOM, TUPRS, TCELL, KRDMD, DOAS, AGHOL, and cement producers led the non-bank gainers while FROTO, TOASO, KOZAL, VESTL, MPARK, EGEEN, and retailers were among the laggards. Coming to this morning, our macro agenda is pretty quiet and eyes will be on lira and global stock markets for a sense of direction. We predict a downtick start for the BIST as global equities are reversing some of their recent gains on worsening coronavirus situation and deaths in a number of major economies. U.S. futures are down c.0.5% in early trades and Asian markets are mostly trading in the red. On a positive note, lira is adding to its recent sharp gains with USDTRY around 7.8450 levels vs 7.8946 at yesterday's BIST closing bell.