Turkey Wake up call: Macro, Political and Equity News, 14th April

This analysis by GLOBAL Securities is presented to you by Raiffeisen Centrobank AG. Raiffeisen Centrobank AG acts solely as a distributor of this analysis and has not introduced any material changes to the content of this analysis or any recommendation included herein.

Wake – up call

BIST ended its seven-day winning streak with a small 0.07% loss yesterday. Index opened gap lower and touched its intraday bottom of 95k in early trades, only to stage a quick rebound that took it back to flat levels by 11AM. Further gains in the afternoon carried the benchmark to a high of 97.3k, but pressure on banks led to a small negative close. Banking index was down 1.59% for the day as the fresh restrictions on FX swaps hurt sentiment for leading bank stocks. TUPRS, FROTO, TOASO, and VESTL stood out as the weak spots of non-financials while aviation stocks, retailers, DOAS, ENKAI, KOZAL, TRKCM, and GOZDE topped the gainers. Coming to this morning, our local macro agenda is muted. We project a positive open for the BIST given the sentiment abroad swinging back to optimism as well as small gains in Lira (USDTRY at 6.7821 vs 6.7962 at yesterday's closing bell). U.S. futures are up 1.5% on top of 1.0-1.2% overnight gains from the hour we left and Asian markets are all trading in the green.
Macro and Political News:
(=/-) Number of deaths from coronavirus reached 1296... According to the Health Ministry, the number of deaths from coronavirus increased by 98 people yesterday and reached 1296. The total number of tested and infected people is 410,556 and 61,049 in Turkey.

(=) Erdogan’s remarks on measurements against Covid-19... President Erdogan made a statement following the cabinet meeting yesterday. Accordingly, the President stated that the weekend-curfew will continue this weekend and it may continue in the following weekends. He also said that two new hospitals will be established with 350 beds in Istanbul for coronavirus patients. Also, the President cited that Turkey delivered assistance to 34 countries for helping to fight coronavirus and that the further support will be in the agenda. Erdogan underlined that Turkey will not be implementing any IMF program during the pandemic. Erdogan said that the private banks are not cooperating in the pandemic period

(=/+) Industrial production in February grew significantly... Industrial production in Turkey advanced by 7.5% YoY and 1.2% MoM in February 2020. In details, the manufacturing production, intermediate goods, capital goods gew by 8%, 9.1% and12% YoY, while tobacco goods manufacturing, furniture manufacturing and coal mining contracted by 21%, 5% and 12% respectively.

(=) Retail turnover improved by 2.2% monthly in February 2020... According to the data released by TURKSTAT, the retail turnover improved by 2.2% MoM and 21.8% YoY in February 2020, while the retail volume increased by 1.4% MoM and 10.6% YoY, respectively in February 2020.

(=/+) CAD at USD1.2bn in February 2020... According to the data released by the CBT, the current account deficit came in at USD1.2bn in February 2020, which was slightly better than the consensus of USD1.3bn. With February data, the current account deficit in 2M20 came in at USD2.8bn.

(=) Unemployment fund paid TL684mn to the unemployed in March... According to the monthly press bulletin, the Unemployment Fund released key metrics for March 2020. Thus, the unemployment fund paid TL683.7mn to the 595k number of unemployeers in March 2020.

(=) SunExpress will kick off cargo operations... A JV between THYAO and Lufthansa, SunExpress announced that it will kick off the cargo operations with 18 airplanes. The first cargo flights will be held between Izmir and Antalya provinces of Turkey and upon the demand, the company considers to expand its cargo operations. Since SunExpress operations correspond to an immaterial share of THYAO’s consolidated financials, we do not expect any positive impact on THYAO’s consolidated financials.

Sector and Company News:

(=) ISCTR bought 2.15mn lots of SISE shares with TRY4.59 – 4.66 price range per share. Its share in SISE reached to 68.41% by this transaction.

(=) SISE bought 2.0mn lots of TRKCM shares with TRY3.13 – 3.18 price range per share. Its share in TRKCM reached to 71.41% by this transaction.

(=) SISE bought 1.5mn lots of SODA shares with TRY5.31 – 5.34 price range per share. Its share in SODA reached to 62.89% by this transaction.

(=) EKGYO; according to the company announcement, based on the advisory decision of Ministry of Trade and the postponement of General Assembly due to Covid-19 outbreak, the BoD will decide and propose a new dividend amount in the near future. Recall that three weeks ago, EKGYO Board had decided to propose a cash dividend of TL76.6mn which corresponds to TL0.02 net DPS to be distributed on April 29, 2020 that indicates a 1.75% dividend yield.

(-) THYAO posted 2.8mn passenger traffic for March 2020, down by 53% YoY. During this period, domestic passengers carried were down by 45% YoY, while international pax were down by 59% YoY. Load factor, on the other hand, decreased by 1760bps to 63.3%. Cargo/Mail carried in March retreated by 8.5% YoY to 128k tons.