Morning Note /
Global

Turkey: Eyes will be on CBRT rate decision

  • FED announced its 75 bps hike as expected

  • So, no rate cuts until 2024, which means bad news for risk assets

  • The uptick rule in short-selling will continue for BIST 50 stocks

ATA Invest
22 September 2022
Published byATA Invest

FED announced its 75 bps hike as expected but the underlying tone was more hawkish than expected and all risk assets sold off. FED members projected rates reaching 4.4% this year and 4.6% in 2023, before moderating to 3.9% in 2024.

So, no rate cuts until 2024, which means bad news for risk assets that have been addicted to cheap and plenty of liquidity in the past 12 years.

The scenario for a global recession has increased as the US Yield curve has inverted for all terms between 1yr-30yrs. Stronger dollar, higher rates and more debt than have ever been a good cocktail for risk assets.

Turkish equities have been trading on their own dynamics in 2022 with sky-high inflation and foreign investor participation has been all but negative except for August. We are seeing foreign investors selling out of their positions that they bought in August in September with the recent correction. We believe interest by foreign investors in Turkish equities will be limited before elections.

It is CBRT rate decision today and we expect a 10bbps rate cut. Is it insanity to expect a rate cut at a time when all central banks are hiking? Absolutely, but Turkey’s monetary policy experiement will go down in history books and we believe they should finish the job they have started and bring down policy rate to single digits while we battle with 80% inflation.      

Company news:

The uptick rule in short-selling will continue for BIST 50 stocks

Tekfen <TKFEN TI> shareholder Ali Nihat Gokyigit sold 1,850K TKFEN shares at TL33/share and their stake declined to 6.12% from 6.62%.

Medicalpark <MPARK TI> bought back 30K shares at an average price of TL46.75 on 21 September 2022. Since 25 May 2022, the total number of shares bought back reached 3.7mn at an average price of TL38.59.

Aselsan <ASELS TI> acquired TL1,050mn (US$57mn) project from Presidency of Defence Industries regarding the Artificial Intelligence Assisted Gendarmerie KGYS (J/KGYS) Project (slightly positive). The project is scheduled to be delivered during 2023-24. The acquired project accounts for 0.7% of US$7.9bn backlog (as of 2Q22-end). We consider that the contribution of the project will be slightly positive.

Weekly Agenda:

Sep, 22: Sep Consumer confidence index

Sep, 22: CBT rate decision ( Ata estimate 100 bps cut, consensus)

Sep, 22: BRSA Weekly banking sector data