Turkey Wake-up call: Macro, Political and Equity News, 5th October

BIST lost 0.51% yesterday as the sour sentiment in global markets weighed on Turkish stocks in the last 45 minutes of the session. BIST100 index spent the bulk of the day in a narrow band in positive territory before yielding to the selling pressure and closed at its intraday low. Banks dropped 0.41% on average, performing broadly in line with the broader market. TUPRS, AEFES, CIMSA, DOHOL, AYGAZ, and electricity gencos were among the gainers while EREGL, TAVHL, PGSUS, KCHOL, DOAS, GLYHO, and OTKAR led the longer array of decliners. Coming to this morning, our local macro agenda involves Central Bank's September'21 real effective FX rate due at 2:30PM local time. The CPI-based index is expected to decline from the 62.89 mark for previous month given ~5.8% depreciation of lira vs the currency basket dwarfing the 1.25% headline CPI print for September. Separately, Treasury will reissue 5-year fixed-rate bonds and 4-year CPI-linkers in double domestic auctions. Total redemption for this week stands at TL12.59bn while the Treasury has raised TL2.78bn in yesterday's auction. We anticipate a flattish start with a positive bias for the BIST given the cautious rebound in S&P futures this AM while Asian markets present a mixed picture. Lira is a tad stronger with the USDTRY pair moving around the 8.86 mark vs 8.8676 at yesterday's closing bell.