TURKEY MARKET OUTLOOK - Down to Neutral
We downgrade our country rating to NEUTRAL from Overweight. Our 1-year forward-looking BIST100 Index target of 127k provides a mere 10% upside, lagging our 17.25% CoE for 1x beta stocks. We see no scope for an across-the-board upward index target revision as our 12.25% RfR is already below the 13% 10-year TRY bond yield.
The long-awaited stimulus package is now fully reflected in the shares prices of relevant corporates, in our view. Financing of those subsidies will now be a key focus for us. On inflation, the CPI is set to tick up y-y from May, not just on base effect but also on currency pass-through. From a top-down strategy point of view, we believe intensifying trade wars could hamper global growth, hurting a primary catalyst of inflows into EM assets. The beta of our model portfolio is cut from 0.97 to 0.93 by the inclusion of two defensive names: Anadolu Cam and Enka.
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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