It is monetary policy day and we are out of words as USD has appreciated 10% this week against the Lira and all Turkish assets are losing value by the minute.
The only asset class that is holding on unsurprisingly is equities, as it seems to be only quick resort as an inflation hedge with most of the industrial blue chips having international businesses or FX-linked businesses (Erdemir, Tupras, Petkim). However, this macro environment does not bode well for banks asset quality and their future cost of risk.
It is MPC day today and both ATA & consensus expects a 100bps cut, but this estimation has lost all its value in our view. President Erdogan reiterated his strong view on high interest rates, hence no matter what happens in today’s MPC does not matter (the most positive outcome would be to stay on hold), as same concerns (cutting too fast ahead of inflation) will continue unless there is different communication about mindset.
*FROTO TI> goes ex-dividend in 19.11.2021, paying TL3.77/share. (1.8% dividend yield)
*SAHOL TI> bought back 400K shares at an average price of TL13.89 on 17 Nov 2021
*ARCLK TI> bought back 143K shares at an average price of TL39.49 on 17 Nov 2021. Since 02 July 2021, the total number of shares bought back reached 34.0mn at an average price of TL32.26.
18 Nov: MPC One-week repo rate (Consensus 100bps cut to 15%)