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

BIST lost 0.75% yesterday as Monday's selling pressure in industrials/services stocks shifted to banks. Early morning recovery attempts in the BIST100 index quickly lost steam and the benchmark spent most of the day in the negative territory to close below the 1,350 support level. Banks lost 1.34% on average with GARAN underperforming. KCHOL, MGROS, KOZAL, SASA, HEKTS, and DOHOL were some of the few gainers while FROTO, EREGL, ENKAI, TAVHL, TTRAK, ULKER, BRISA, ODAS, and DEVA topped the laggards among non-banks. Today, our key macro agenda item will be the monthly Monetary Policy Council meeting with the decision on policy rates due 2PM local time. Participants in the Bloomberg survey unanimously expect the MPC to keep its benchmark weekly repo rate unchanged at 19.00% for the fourth month running, given the uptick in inflation as well as continued pressure on the Lira. Separately, Treasury will offer 2-year USD-denominated bonds and 2-year Euro-denominated sukuk papers via direct sales in the domestic market today today. Domestic redemption is TL24.69bn for the week while the Treasury has already raised TL12.22bn in the three auctions/placements on Monday and Tuesday. BIST seems off to a sideways open with a negative bias as the global stock markets are in profit taking mood after yesterday's U.S. inflation data. Lira is also somewhat weaker with the USDTRY pair at 8.6350 levels vs 8.5972 at yesterday's closing bell. Please note the Turkish markets will be closed tomorrow for a national holiday and also for the religious Eid holiday next week except for Monday's half-day session, so trades in the BIST today will settle on Monday, 26-July.