Morning Note /
Turkey

Turkey: October CPI will be the most important domestic event of this week

  • Strong global risk off mode also hit Turkish equities, the only stronghold against the ever-depreciating Lira

  • Omicron variant fear hit all growth-related stocks but mostly aviation and other travel stocks

  • We expect a 3.6% m/m (consensus 3%) increase, which will carry annual inflation to 21.5% y/y in Nov'21.

Batuhan Ozsahin
ATA Invest
29 November 2021
Published by

Strong global risk off mode also hit Turkish equities, the only stronghold against the ever-depreciating Lira. Omicron variant fear hit all growth-related stocks but mostly aviation and other travel stocks. Turkish Airlines, Pegasus and TAV were all limit down for a long period before gaining a little at the end. The omicron news will impact the markets for some time like the delta variant did but if it does not prove to be more lethal, we will go back to the old thinking of buying the dip as usual. Unusually deep price actions always create opportunities unless the big picture does not deteriorate.

October CPI will be the most important domestic event of this week, as we expect a 3.6% m/m (consensus 3%) increase, which will carry annual inflation to 21.5%. Reported monthly inflation rates will be very volatile in the next 3 months, as we expect a 6% m/m increase either in December or January, which can carry annual inflation to 29%. Can we survive with a 10-14% negative interest rate and will that not bring more devaluation?

Macro news:

The 13-week annualized credit growth trend reached 16.6% with TL commercial loans whose 13-week trend rate reached 30%, while consumer credits remained rather parallel with an 18.8% 13-week trend.

Foreign currency deposits of residents increased by USD1bn(price adjusted), as households bought USD1.6bn and corporates sold USD0.6bn. Year-to-date FC deposits rose by USD6.9bn(price adjusted) and the dollarization ratio of total deposits in the system reached 59.3%.

Company news:

*SAHOL TI> bought back 500K shares at an average price of TL12.99 on 26 Nov 2021. Since 09 Nov 2021, the total number of shares bought back reached 3.9mn at an average price of TL13.52.

Weekly Agenda:

Nov 29: October Trade Balance( Consensus -USD1.5bn)

Nov 30: 3Q GDP (ATA. 7.6% y/y, consensus 7.4%)

Dec 1: Nov PMI (October 51.2)

Dec 3: Nov CPI ( ATA 3.6% m/m, 21.5% y/y, Consensus 3% m/m, 20.7% y/y)