Turkey Wake up call: Macro, Political and Equity News, 24th August

BIST lost 1.50% on Friday as the rally in energy and petrochemicals stocks following Turkey's gas find in the Black Sea yielded to profit taking in the afternoon. But the BIST100 index still managed to book a 2.40% gain for the whole week. Banking stocks fared somewhat better on Friday with the 0.59% drop in their sector index. Sharp losses in TUPRS, PETKM, AYGAZ, IPEKE, and electricity stocks as well as DOAS, EKGYO, and HEKTS weighed on the broader market while KCHOL, SAHOL, TKFEN, AEFES, TATGD, and AGHOL were among the rare names that bucked the broad-based sell-off. Fitch revised the outlook on Turkey's sovereign rating to Negative from Stable in an unexpected move at its scheduled review on Friday evening while affirming the BB- rating (3 notches below the investment-grade). Coming to this morning, our local macro agenda involves Ministry of Tourism's tourist arrival numbers for July'20 due at 11AM local time today. Foreign tourist arrivals had plunged 96.0% yoy to 0.21mn in June, bringing the cumulative YtD arrivals to 4.51mn visitors, down 75.1% from the corresponding period of 2019. Separately, Treasury will reissue 4-year fixed-coupon bonds and 7-year FRNs in double domestic borrowing auctions today. Will separately sell 4-year sukuk papers tomorrow and wrap up this month's heavy borrowing programme. We foresee a flattish open for the BIST as the small weakness in lira (USDTRY at 7.3492 vs 7.3432 at Friday's closing bell) and potential further pressure on Friday's limit-down names may balance out the optimism from upbeat global markets. U.S. futures are up 0.3% in early trades on top of the 0.3-0.5% overnight increases after the time we left and Asian equity indices are almost all trading in the green.