Model Portfolio / TURKEY MARKET OUTLOOK – Remain Overweight on Banks
Remain Overweight on Banks
We continue to prefer banks over non financials in this Key Ideas reshuffle. Banks we cover are trading near historical low multiples.
Asset quality issues are unlikely to drastically hurt P&Ls, in our view, thanks to ongoing restructuring. Mounting CPI linker gains should offset core spread erosion and increased provisioning backed by adjustments in macro assumptions for 2H18E. We expect banks to be able to roll over around 70% of their syndicated loans in the remainder of this year. This relatively low rollover rate is unlikely to result to any material liquidity glitch, given reduced funding needs due to a lack of loan demand. While the details are yet to be carved out, a well-structured recapitalisation programme could prompt renewed investor interest in TR banks.
On top of our existing bank preferences, Akbank and Garanti, we now include Vakifbank, to elevate Banks to 4.5ppt above their BIST100 Index weighting. From non-financials we include BIM, Koza Gold and Kafein Software.
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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