Turkey Wake-up call: Macro, Political and Equity News, 15th December

BIST added another 1.30% yesterday to close at a fresh all-time high. After an uptick start that marked the lowest point of the day, BIST100 index gradually climbed to 1,395 levels soon after 5PM and some profit taking during the last 45 minutes trimmed a small part of the earlier gains. Banks gained 1.10% on average with YKBNK and ISCTR outperforming vs the two state lenders falling behind. TUPRS, KCHOL, TOASO, OTKAR, HEKTS, SELEC, TMSN, ODAS, and LOGO topped the gainers while YATAS, VESTL, EGEEN, CCOLA, SOKM, and AKCNS were among the rare decliners. We are starting out the new day with the official U.S. decision last night to issue sanctions vs Turkey's military procurement agency for Ankara's purchase of S-400 missile defense system from Russia in 2017. The sanctions include a ban on U.S. export licenses and authorizations as well as loans to the Undersecretariat of Defense Industries (SSM) and asset freezes and visa restrictions against the organization's president and three other senior officials. On the macro front, TurkStat to release the residential sales data for October20 at 10AM local time. Home sales had dropped 16.3% yoy to 120k units in October as the summer frenzy on favorable mortgage rates continued to fade away amid rising interest rates that led to a 49.3% yoy decline in mortgage-backed transactions. Separately, November'20 central government budget numbers are due 11AM. BIST seems off to a negative start given the sour mood abroad and the official announcement of U.S. sanctions, but we note the market shrugging off the reports on Friday as well as the announcement last night in after-hours action in index futures that added some 10 points. U.S. futures are up a few points in only partial recovery of the 1.3-1.4% overnight losses after we left and Asian equity indices are all trading in the red. Lira is a tad weaker with USDTRY at 7.8650 levels vs 7.8476 at yesterday's closing bell.