Turkey Wake up call: Macro, Political and Equity News, 21st 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 added 0.78% yesterday in its third consecutive day of gains despite continued pressure on lira. Benchmark BIST100 opened higher at the 98.7k mark and spent the day in the positive territory except for a brief incursion into red around mid-afternoon. Banks again lagged the broader market with the 0.15% increase in their sector index. Retailers, Sisecam group stocks, DOAS, KRDMD, and AKSEN topped the non-financial gainers while aviation stocks (except for THYAO), SAHOL, KCHOL, ENKAI, and GUBRF were among the weak spots. Today, our local macro agenda is quite apart from the Treasury's reissue of 3-year CPI-linkers in its single domestic borrowing auction ahead of its TL7.62bn domestic redemption this week. BIST is off a weak start given yesterday's plunge in oil prices weighing on the risk sentiment in global markets while lira is flattish around the 6.9460 mark vs the greenback. U.S. futures are down about 0.6% in early trades on top of the 1.3-1.6% overnight losses in main indices after the hour we left. Asian markets are all trading in the red. We remind that Turkish markets will be closed in observance of a national holiday on Thursday, 23-April and today's trades in the BIST will settle on Friday.
Macro and Political News:
(=/-) Number of deaths from coronavirus reached 2140... According to the Health Ministry, the number of deaths from coronavirus increased by 123 people yesterday and reached 2,140. The total number of tested and infected people are 673,980 and 90,980 in Turkey.

(=/-) Turkey’s net international investment position released at minus USD333bn in Feb... According to the data released by the Central Bank of Turkey, the net international investment position was at minus USD333bn in February 2020 compared to minus USD366bn in January 2020. While Turkey’s international assets were USD251bn, the international liabilities were USD584bn in February 2020.

(=/+) IGA said the third runway will be ready in June... Istanbul Grand Airport announced that the third runway will be ready to use on June 18th, 2020. Currently the construction of the runway still continue. With the inclusion of third runway, the taxi durations will be almost halved. According to the simulations, an average landing time for an airplane will decline to 11 minutes from 15 minutes while the taking off time for an airplane will decline to 15 minutes from 22 minutes. With the third runway, the air traffic capacity will be increased to 120 airplane from 80, while the daily landing-taking off capacity will reach 2,800.

(=) Russian missile defence system installation to be delayed... According to a senior official told Reuters, switch on its new Russian missile defence systems S-400 is delayed due to the coronavirus outbreak. Recall that the missile systems would be activated within April 2020.

(=) Weekend curfew extended... Unlike the previous curfews in last two weekends, the Interior Ministry stated that the weekend curfew will start April 23rd and end April 26th.


Sector and Company News:

(=/-) TUPRS Due to the negative impacts of covid-19 pandemic on fuel products demand and product margins as well as declining oil prices, TUPRS management decided to revise down its 2020E guidance. Accordingly, the company lowered its production and sales volume targets to 24mn/tons and 25mn/tons from 28mn/tons and 29mn/tons. On refining margins, TUPRS management reduced its 2020E guidance to USD3.0-4.0/bbl from USD4.5-5.5/bbl. For CAPEX, TUPRS expects to spend USD125mn for 2020E compared to the previous guidance of USD200mn. We deem that TUPRS’s guidance downward revision is neutral at this stage given the bleak outlook of oil and refining industry.

(=) CCOLA revised its dividend distribution amount in accordance with the new regulation. Accordingly, the Company will distribute TL0.94 dividend p/s. A total TL239mn gross dividends to be paid on May 28, 2020.

(=) SISE bought 0.7mn lots of SODA shares with TRY5.70 – 5.81 price range per share. Its share in SODA reached to 63.02% by this transaction.

(-) FROTO expanded its previous decision to halt production until May 4, 2020. Recall that the Company had decided to halt production for two weeks starting from March 20 and extended it until April 13 and April 27 for two times.

(=) TTRAK started producing "intubation and biological sampling" cabinets at its plants in Sakarya Erenler and Ankara. We have discussed the issue with the Company and the production will not have a significant positive impact on Company financials.

(=/+) According to Bloomberg News posted yesterday, Turkish Treasury is planning to increase public banks’ (Ziraat Bankasi, Halkbank and Vakifbank) capital. The reason behind this action is the loan expansion of public banks during hard economic conditions cause an erosion in their capitals. Although comparing to international criteria, capital adequacy ratio is well above for public banks, they want to play safer during the global uncertain economic conditions. The timing and the amount is not announced yet.