Turkish equities moved higher with banks opening higher after Halkbank shares reacted to its legal case in the US (we still think it is a good opportunity to sell the stock, as the news flow does not practically change anything).
Erdemir was a drag on the index (10% weight), as the news flow from China was not supportive.
The rise in US yields to pre-pandemic levels and higher oil prices will be impacting markets in the coming days and with a 12% run year-to-date, we could also see some profit-taking in our market, but nothing dramatic as equities continue to be the only address in a deeply negative real interest rate environment.
Macro news:
According to the December central government budget data, the budget deficit was recorded at TRY 145.7bn, while the primary balance yielded a deficit of TRY136.8bn. Compared 2020, the budget deficit increased to TRY192.2bn from TRY175.3bn. Budget deficit to GDP jumped to 1.3% in November to 2.9% in December. The sharp budget deterioration in December showed that the fiscal front will also be an area to watch closely and the government will not be able to move as freely as it wanted without fueling inflation.
Company news:
*SAHOL TI> bought back 600K shares at an average price of TL15.43 on 17 Jan 2022. Since 09 Nov 2021, the total number of shares bought back reached 13.7mn at an average price of TL14.08.
*AUTOS: December 2021: Motor vehicle exports increased by 8% y/y… On a segmental basis, passenger car (PC) exports increased by 6% y/y to 58K units in December 2021, whereas LCV exports increased by 9% y/y to 42K units during the same period. HCV exports were up by 57% y/y to 2.5K units in December 2021. Tofas’ export volume increased by 8% y/y to 8K units in December 2021. Ford Otosan’s export sales volume increased by 8% y/y to 35K units during the same period. Tofas full-year export volume decreased by 5% y/y to 112.5K in 2021 which was 3% lower than our estimate of 115.5K and 6-13% lower than Tofas’ guidance of 120-130K export volume. Ford Otosan full-year export sales volume increased by 13% y/y to 287.6K in 2021 which was 7% lower than our estimate of 310K and 6-9% lower than Ford’s guidance of 305-315K units shared during 3Q21 results announcement. However, lower than export volume was not surprising considering the announcement of production halt in November indicating a production cut of 18K units. Tofas and Ford Otosan had announced their guidance with 3Q21 results. Tofas had lowered their upper band for export sales volume expectations for 2021E to 120-130K units from 150-160K units. We expect Tofas export sales to increase by 8% y/y to 127K units in 2021E. Ford Otosan had revised down their guidance to 305-315K units from 315-325K. Motor vehicle production in Turkey declined by 12% y/y to 132K in December 2021 driven by 17% y/y decrease in PC production to 77K units and 6% y/y decrease in LCV production to 50K. HCV production was up by 25% y/y to 4.7K units in December 2021. Domestic HCV sales increased by 18% y/y to 4.3K units in December 2021.
Weekly Agenda:
Jan 20: One-Week Repo Rate( Current rate 14%, consensus expectation 14%)
Jan 21: January Consumer Confidence ( December 68.9)