Model Portfolio / TURKEY MARKET OUTLOOK - Further raising banks’ weightings
In this reshuffle, we take profits on Arcelik and BIMAS while adding 4 new names to our portfolio: Coca Cola Icecek, Migros, Sabanci Holding and THYAO.
We are further increasing the weighting of banks in our portfolio to 6pp above that of BIST100. We believe some bank managements are overly pessimistic in their 2019 preliminary guidance and will gradually raise it. While sluggish loan originations are delaying the timing of this expected spread recovery, we expect spreads to get better q-q, every quarter throughout 2019, to almost match that of a year earlier. We believe discretionary provision reversals will counterbalance the 5-6pp lower yields on CPI linkers for most banks in our coverage. We do not subscribe to the excessive NPL ratio expectations in the market and build our base case on 6% for 2019-end - up from the prevailing 3.5%. Lack of loan demand coupled with unexpectedly strong deposit inflows are set to prevent potential liquidity problems. Deposit rate declines exceeding management expectations should support profits, in our view.
TEB Investment equity research analysts and strategist team consists of 8 analysts with an average finance sector experience of 15 years and special focus on international investors.
With our 6 equity research analysts we cover 93 companies across 21 sectors, reflecting 80% of the total market capitalization of all BIST companies and 86% of the BIST100 companies. Our strategy team provides in depth top-down and bottom-up market views with insight on FX and bond markets by publishing sectoral and strategic reports both in English and Turkish.
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