WOOD Flash – Turkey macro: going bold
The Central Bank of Turkey (CBT) has cut the policy rate by 425bps to 19.75%, exceeding the consensus projection of 21.50% and our expectation of a cumulative 100bps of cuts this year. The CBT stated that the adjustment was motivated by highlighting the growing downside risks to inflation – also motivated by a weaker global backdrop – as well as the improvements in the current account and a gradual economic recovery in sight.We have refreshed our model estimates for the lira and local long-term bond yields, in the event of a cumulative easing of 1,200bps in the coming year: which signal the fair value for the lira at 6.6/USD by the year-end and 7.4/USD by the end of 2020E. Housing affordability should improve noticeably at the end of this easing cycle; although, in order to bring Turkey to a comparable affordability metric vs. central Europe, a total of 1,700bps would be needed in the coming years.
WOOD & Company is the leading investment bank in Emerging Europe. Founded in 1991 and head-quartered in Prague, our footprint spans the region and touches investors around the globe.
A pioneer in Emerging Europe, WOOD executed many of the first CEE equity trades and landmark investment banking transactions. Our electronic trading platform was the first in the region, and remains the best. We are continually expanding our relevance and reach in these ever-evolving markets.
Our equity market share reflects our stature: 7% in Warsaw, 20% in Bucharest, 16% in Hungary, 40% in Prague and 5% in Vienna. Our distribution is unparalleled, with the largest salesforce in the region, servicing a uniquely diverse investor base.
We couple local expertise with a truly international perspective. With offices on the ground in the region, and in key financial hubs such as London and Milano, we are never far from our clients and we remain at the forefront of what’s afoot in the CEE emerging and frontier landscape.
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