Morning Note /
Global

Turkey: The looming dangers of a big jump in inflation

  • Even on a good day for all EMFX, Lira lost 3.5% as President Erdogan reiterated his stance on low interest rates

  • If TL weakens, go for the exporters or other FX linked businesses worked well while the banks continued to be weaker

  • With such deterioration in the macro picture, it is not surprising for the banks to underperform

ATA Invest
30 November 2021
Published byATA Invest

Even on a good day for all other EMFX, Lira lost 3.5% against USD as President Erdogan reiterated his stance on low interest rates for the way out.

The same theme, if TL weakens, go for the exporters or other FX linked businesses worked well again as Tupras, Eregli, Sasa and Aselsan pushed the index higher, while the banks continued to be the weaker link.

With such deterioration in the macro picture, it is not surprising for the banks to underperform despite blockbuster 4Q profits, especially helped with higher CPI linker valuations( most banks were using 17.5-18% as of 3Q), as we could easily end the year with 25% CPI.

Macro news:

Foreign trade deficit declined by 40.1% y/y to US$1.44bn (-44.5% m/m) in Oct’21.

The proportion of imports covered by exports increased by 570bps to 93.5% in Oct’21. Net gold exports realized as US$27mn in Oct’21 (Oct’20: -US$1.6bn). Gold trade excluded proportion of imports covered by exports declined by 198bps y/y to 93.3% in Oct’21. Germany got the first spot in the major export destinations with US$1.69bn (4.6% y/y) inOct’21. Exports to USA (stands as the second major export destination) increased by 35.4% y/y to US$1.31bn in Oct’21. China got the first spot in the major import destinations. Imports from China increased by 31.5% to US$2.53bn in Oct’21. Imports from Russia (stands as the second major import destination) increased by 86.8% y/y to US$2.43bn in Oct’21

Company news:

TAVHL: According to Bloomberg HT, Limak and Vinci will prepare a joint offer to operate Antalya Airport in 1 December 2021 <Neutral> Analyst Comment: Antalya Airport is currently being operated by TAVHL and Fraport with 50-50% equal rights. TAVHL-Fraport has operating rights until December 2026. Antalya Airport has 25mn international and 10mn domestic, in total 35mn total PAX capacity currently. In 2019, Antalya Airport served 35.7mn total PAX. In 2020, due to COVID-19 total PAX decreased by 73% to 9.7mn. In 9M21, Antalya Airport served 16.3mn total PAX, 55% of its 9M19 level.

According to haber.aero news website, the new contract will include a capacity expansion investment. As it can be understood from 2019 total PAX numbers, Antalya Airport needs a capacity expansion plan. The new concession period will be for 25 years starting from 2027. Limak Holding is currently operating 3 airports which are Pristina Adem Yasari International Airport in Kosovo, Blaise Diagne Airport in Senegal and Istanbul Airport in Turkey. Limak Holding’s first business as airport operator was Sabiha Gokcen Airport in Turkey. In 2014, Malaysia Airport Holding purchased Limak Holding’s shares in Sabiha Gokcen Airport. Vinci is a large group operating in infrastructure, energy and construction industries. Vinci Airports is currently operating 45 airports in Portugal, France, UK, Japan, Cambodia, USA, Brazil, Chile, Serbia, Costa Rica, Dominician Republic and Sweden.

*VESTL: will pay TL 2,345794 /share dividend today and the reference price will be TL 28,634

*ENKAI: Chairman Sinan Tara bought 150K shares within the TL15.33-15.55 range