Turkey Wake-up call: Macro, Political and Equity News, 21st July

BIST climbed 0.93% yesterday in its third day of winning streak during which its cumulative gains have reached almost 6%. It was another day that the index spent in positive territory except for a brief incursion to red around mid-afternoon. Banks fell slightly behind with their sector index pocketing a 0.55% daily gain amid some profit-taking in ISCTR and GARAN. TUPRS, TAVHL, PETKM, CIMSA, ODAS, TURSG and YATAS topped the non-bank winners in the BIST100 space while DOAS, ENKAI, ASELS, PGSUS, GWIND, OYAKC, INDES, and OTKAR stood out among the decliners. Coming to this morning, 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 almost unanimously expect the MPC to keep its benchmark weekly repo rate unchanged at 14.00% for the sixth consecutive month (after cumulative cuts of 500bps in the preceding four months) while one economist foresees a 100bps cut. On the political front, President Erdogan will chair the National Security Council meeting starting at 2:30PM. We predict a flattish start for the BIST given the weaker appetite in international markets this morning as risk assets seem to be digesting recent gains. U.S. futures are up a few points while Asian equity indices present a mixed picture.