Turkey Wake up call: Macro, Political and Equity News, 6th April

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Wake – up call

BIST inched up 0.05% on Friday after a rather quiet day during which the index was confined to a 900-point range between 89.0-89.9k and the benchmark BIST100 managed to climb 1.62% for the whole week as Turkish stocks seemed to be licking their wound after the recent sell-off. Banks again underperformed with the 0.88% drop in their index. BIMAS, PETKM, GUBRF, AEFES, and PGSUS stood out as the weakest non-financials while KCHOL and key subsidiaries like TUPRS, ARCLK, FROTO, and TOASO as well as ULKER, ENJSA, SODA, and MGROS were among the top gainers for the day. Coming to this morning, our local macro agenda involves Central Bank 's March'20 real effective FX rate due at 2:30PM local time. The CPI-based index is expected to decline further from its 7-month low of 75.16 mark for previous month given ~5.86% depreciation of lira vs the currency basket dwarfing the 0.57% headline CPI print for March. Separately, Treasury will reissue 14-month discount bonds and 8-year CPI linkers in its double domestic borrowing auctions for today. Will hold two more auctions tomorrow ahead of its meager TL117mn redemption this week, but there was also an unrolled TL12.30bn domestic redemption from last week. BIST is off to a positive start given the similar mood in global markets on rising hopes that virus-related deaths are slowing down in key European epicenters while the slide in lira (USDTRY at 6.7524 vs 6.7014 at Friday's closing bell) may create some headwinds. U.S. futures are up 3.5% in early trades and Asian equities are all trading in the green.
Macro and Political News:
(=) Turkey announced new measurements against covid-19... President Erdogan declared new measurements on last Friday against covid-19. Accordingly, entrance and exit to 31 cities have prohibited, ii) Face masks have been mandated in crowded places such as bazaars and markets, iii) curfew has been imposed for people younger than 20 years (recall that there are already a curfew for people above 65 years)

(=) The Treasury will hold two tenders... Accordingly, the Treasury will hold two bond tenders today. The first one will be related to re-issue of 427-day maturity bond and the second one will have 8-year maturity CPI-linker.

(=) The dividend pay-out ratio has been limited at 25%...The Treasury and Finance Ministry announced on their Twitter account, limiting the dividend pay out ratio with at most 25% of the companies’ distributable net earnings, generated in 2019 year. The Ministry also stated that the key reason behind the decicision is to secure the employment, companys’ equities and cash balances.
(=) Swap limits increased... The Central Bank of Turkey increasing the limits in traditional swap tenders for banks to USD15bn from USD10bn.
Sector and Company News:

(=/+) AKSEN will resume electricity generation in Sanliurfa plant within this week. Recall that the electricity generation was halted by late January 2020 in that plant.

(-) AKSA announced that the company will cut its production by 50% due to the weakness in demand as a result of covid-19. The company will also apply for short-time working allowance to the Ministry.

(-) THYAO stopped its domestic flights until April 20th. Recall that THY already stopped its international flights until April-end.

(=) VAKBN obtained a loan from ICBC Turkey amounting USD325mn with 3 years maturity. The loan will be used for trade financing and general purpose.

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

(-) TTRAK expanded its previous decision to halt production until April 20, 2020. Recall that the Company had decided to halt production for two weeks starting from March 23.

(=) CIMSA Serra Sabanci, a member of Sabanci Family, applied to Central Securities Depository of Turkey to convert its 292k shares into publicly tradable.

(-) EGEEN expanded its previous decision to halt production until April 9, 2020. Recall that the Company had decided to halt production for two weeks starting from March 24.