Morning Note /
Turkey

Turkey: This week’s most important event is the MPC meeting

  • The Lira depreciation doesn’t seem to end as Lira has weakened past the 10 level against USD

  • This week’s most important event is the MPC meeting when the committee is expected to cut policy rate by 100bps to 15%.

  • The market will be lifted by BBVA’s voluntary offer for Garanti’s shares

Batuhan Ozsahin
ATA Invest
15 November 2021
Published by

The Lira depreciation doesn’t seem to end as Lira has weakened past 10 level against USD. This week’s most important event is the MPC meeting when the committee is expected to cut policy rate by 100bps to 15%. Having surprised market participants by larger then expected cuts in the last 2 meetings, MPC might once again surprise and not cut this time around, given the fast devaluation of Lira. The positive impact of the stay on hold position would be transitory in our view.

The market will be lifted by BBVA’s voluntary offer for Garanti’s shares, which should lift all banking stocks today. There is no similar structure to benefit any other bank at BIST anymore as Unicredit is on its way out and no foreign-owned bank left at BIST except for QNB Finansbank, which has a negligible float and is astronomically expensive on its trading multiples.

Macro news:

Industrial Production* (IP) declined by 1.5% m/m in Sep'21 (9.1% y/y).

  • Industrial production* increased by 9.1% y/y in Sep’21 (Aug’21: 13.4% y/y)

  • Industrial production* increased by 19.8% y/y in 9M21.

 

CBT Survey of Participants: 2021 GDP growth expectations realised at 9.2% in Nov’21.

  • Year-end inflation expectations realized at 19.31% in Nov’21.

  • 2021 year-end US$/TL rate expectation realised at 9.98 in Nov’21.

Current Account Balance expectations realised at -US$19.2bn in Nov’21.

 

Company news:

GARAN >BBVA has decided to make a voluntary buy back of all the outstanding shares (50.15% of capital) in the free float. The offer price is TL12.20/share, which is 15% higher than Friday’s close. The offer will be official after approval by the Capital Market Board. Garanti has been our top pick among Turkish banking universe for years with its superior management and higher ROE despite a very volatile macro environment. Given the steep devaluation of Lira in 2021, it makes sense for BBVA to buy the remainder of Garanti’s shares.

 SOKM: Regarding a stake sale in Sok Market to Getir, a non-binding letter of intent is signed between Yıldız Holding ( positive for SOKM TI) In order to create synergies in the digital area, a non-binding MOU is signed regarding strategic partnership negotiations for the sale of some minority shares of Sok Market owned by Yıldız Holding and its subsidiaries to Getir Perakende Lojistik or its related companies.

Weekly Agenda:

15 Nov: October Home Sales

15 Nov: October Central Government budget balance

18 Nov: MPC One-week repo rate (Consensus 100bps cut to 15%)