Turkey Wake up call: Macro, Political and Equity News, 7th 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 jumped 2.81% yesterday as the continued rebound in global peers supported Turkish stocks too, but the weakness in lira seemed to create some headwinds as the gains in European peers and U.S. futures were even more impressive. After a gap higher open around the 91.2k mark and range trading until around 1PM, BIST100 index gained further traction in the second half of the day to close near its intraday peak. Banks gained 3.15% on average with ISCTR leading its peers. KCHOL, TOASO, FROTO, ENKAI, TKFEN, MAVI, Koza Group names, and aviation stocks stood out as outperformers while SOKM and ALKIM were the only two decliners in the BIST100 space. Coming to this morning, our local macro agenda involves Treasury's cash budget balance for March'20 to be disclosed at 5:30PM local time. Separately, Treasury will reissue 3-year TLREF-indexed bonds and separately offer 5-year CPI-indexed sukuk papers via a direct placement today. Domestic redemption is only TL117mn for the week on top of an unrolled USD12.30bn from last week while Treasury has already raised TL12.60bn in its double auctions held yesterday. BIST seems headed for another positive start given 2.3-2.9% overnight gains in U.S. indices after the hour we left and continued gains in most Asian markets this morning. Lira is flattish around the 6.7660 mark vs the greenback.
Macro and Political News:
(=) REER at 72.87 in March... Reel Effective Exchange rate announced at 72.87 in March 2020, compared to 75.13 in February 2020.
(=) Monthly price development report for March... The Central Bank of Turkey released the monthly price development report for March. Recall that CPI rose by 0.57% MoM in March, coming in-line with the consensus of 0.55% and PPI came in at 0.87% MoM. CPI in March dragged down the annual CPI by 51bps to 11.86%, supported by the favorable energy and food prices. Despite TL’s depreciation against hard currency, the weak trend of international energy prices led to the weakness in energy prices in Turkey. Slowdown in food inflation was mainly driven by fresh vegetable and fruit prices. While the service CPI slowed down, the core inflation inched up mainly due to the core goods group.
Sector and Company News:
(=) PETKM, Socar Turkey Executive Mr. Lecompte stated that PETKM meets the demand for its medical raw material production. With the decline in jet fuel demand, Mr. Lecompte said that Star Refinery shifted its gasoline production to diesel. On the other hand, Mr. Lecompte underlined that Socar Turkey hopefully will kick off the petrochemical investment in Turkey with BP.
(=) YATAS announced current status has limited impact on company financials. Note that the Company closed its own stores on March 24, 2020. Revenue from own stores constitutes c. 12% of total revenue. YATAS also mentioned that the Company will aim to grow its online sales channel in this period.
KFEIN signed a new Test Support Agreement amounting to TL4.4mn. There is no further details regarding the agreement.
(=) According to the Bloomberg news, BRSA sent a letter to banks to assure that the economic support loans are utilized in line with their purpose. The banking authority aims to prevent the loans to be used for buying foreign exchange, gold or some other financial instruments instead of being used for companies’ operations.
(=) Foreign investors were USD1,037.5mn net sellers in the BIST in March'20 in the worst single monthly outflow since November'15 as the risk-off mood on coronavirus outbreak continued to wreak havoc on EM's. ASELS for the second month in a row and a few other non-banks were among those rare stocks that attracted net, albeit limited, inflows from non-resident investors during the month while banks, EREGL, and TCELL were among the most sold. Foreign share in total BIST market volume recovered slightly to 26.6% from previous month's 26.4%, but was below the 32.1% for same month of last year. March'20 data carried the YtD net foreign outflows to USD2,446mn from USD1,408mn a month ago in the highest-ever quarterly non-resident investor exodus from the BIST while 12-month trailing net foreign outflows climbed to USD3,296mn from USD2,917mn a month ago on base effect (USD8mn net inflows in March'19). Top monthly net inflows (net amounts in USDmn) were: ASELS (10.3), SAHOL (10.1), TKFEN (8.8), PETKM (6.1), HEKTS (2.1), ALKIM (1.1), ODAS (1.0), OLMIP (0.9). Top net outflows (net amounts in USDmn) were: YKBNK (-86.7), GARAN (-71.4), EREGL (-66.3), AKBNK (-49.1), ISCTR (-47.4), TCELL (-45.4), VAKBN (-45.4), PGSUS (-40.4).


Most Bought (USD,Mn) Most Sold (USD,Mn)
ASELS 10.279.053 YKBNK -86.676.143
SAHOL 10.146.473 GARAN -71.377.747
TKFEN 8.766.866 EREGL -66.307.541
PETKM 6.113.460 AKBNK -49.052.666
HEKTS 2.118.638 ISCTR -47.395.289
ALKIM 1.113.779 TCELL -45.358.586
ODAS 974.083 VAKBN -45.356.891
OLMIP 910.692 PGSUS -40.448.906
ANELE 900.912 KOZAL -36.562.048
AEFES 805.594 TUPRS -36.194.049