Turkey Wake-up call: Macro, Political and Equity News, 18th October

BIST slipped 0.16% on Friday in its fourth consecutive day of small-scale changes, but managed to close the week with a cumulative gain of 0.83%. BIST100 index tested the 1,421 level in early trades, but reversed its gains after 10:30AM. Afternoon trading saw more selling pressure but the gains in some key non-banks helped cushion the weakness. Banks visibly underperformed with the 2.31% drop in their sector index as bellwether GARAN was the worst hit. TUPRS, aviation stocks, steelmakers, DOAS, and EKGYO led the non-bank gainers while KOZAL, FROTO, DOHOL, VESTL, ARCLK, and ENKAI were some of the weaker names. Coming to the start of the new week, our local macro agenda is muted apart from Treasury's reissue of 2-year fixed-rate bonds and issue of 5-year TLREF-indexed bonds in double domestic borrowing auctions. Will hold three more auctions/direct sales tomorrow ahead of this week's hefty TL32.58bn redemption. We anticipate a slight negative open for the BIST given the sour sentiment abroad and continued weakness in lira (USDTRY at 9.2850 mark vs 9.2103 at Friday's closing bell). S&P futures are trading slightly lower and Asian stock markets are mostly in the red.