TURKEY MARKET OUTLOOK - Maintaining our constructive view
We remain constructive on Turkey given: 1) continued global liquidity backed by dovish central banks, 2) peer topping volatility adjusted TRY carry returns, 3) decade low foreign ownership in TRY fixed income at 14%, 4) kicking in growth as evidenced by recovering IP (working days and seasonally adjusted m-m +1% in Jan-19), real sector confidence (99 for March vs 95 for Jan-19) and loan growth (13w FX adjusted +9% as of mid-March vs -9% in Jan-19), 5) annual current account deficit could be thinnest of the last 16 years in 3Q19, ie, less financing need from abroad, and 6) expected 10% CPI for Sep-Oct, that is half the current level is set to have positive implications on bond yields and eventually on equity valuations.
We are trimming the weighting of the banks by 5pp to 27%, implying a slight overweight positioning. In this relatively defensive portfolio, we particularly emphasis corporates with FX income streams, immune to currency fluctuations and better cash positions.
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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