Download 22 July-26 July Weekly Report

July 22, 2013
For professional investors only
Stock market last week
BIST 100 ended the week up 2.6%, bond yields fell back below 9% and
the lira strengthened against the dollar following a message by CBRT
Governor, Basci, that a hike to the upper end of the I/R corridor was on
the cards in the upcoming MPC, as well as a more dovish tone struck
by Federal Reserve Chairman Ben Bernanke on the future of monetary
policy. Banks, nevertheless, suffered heavy losses on Friday on news
that some of them were exposed to a sizeable loan to a Turkish
conglomerate that was having trouble making payments. Hard data
however continued to come in strong. The April unemployment rate
declined despite an increase in the participation rate while the central
government posted a primary surplus in June on back of a pick-up in
fiscal revenues.
MACRO NEWS
Central government budget balance. Central government budget
produced TRY 0.3bn primary surplus in June, from TRY4.4bn primary
deficit a year ago thanks to the strong revenues and favourable base
effects on expenditures. Budget revenues increased 27% y/y in June,
mainly due to the pickup in tax collections. Domestic VAT increased by
50% y/y on the back of stronger domestic consumption. Similarly,
taxes on imports rose by 47% y/y (in USD terms 41% y/y), which
suggests that June’s imports could reach USD23-24bn. This figure
implies that 12-month cumulative c/a deficit could increase from USD
53.5bn in May to above USD 56bn in June. If tax payments incorporate
energy SOE’s payments of past tax obligations – which was the case on
several occasions in the past- the implied import level could be lower
than USD 23-24bn but still remain elevated. On the expenditure front,
favourable base effects limited the increase in government spending.
Non-interest expenditures increased only by 6.4% y/y, thanks to the
5.1% y/y decline in personnel payments. Personnel payments declined
as one-off payments due to the wage hikes in 2012 were not repeated
this year. Capital expenditures increased by 67% y/y and maintained a
similar pace of increase since the start of the year. Construction of
motorways was the primary source of the acceleration in capital
spending. The increase in current transfers was limited to 3.3%, due to
the decline in transfers to Social Security Institution. However, the
decline is likely to be only temporary and reverse itself next month.
Equities
ISE-100
Turnover*, $ mn
Market Cap, $ bn
MSCI Turkey
MSCI EMEA
MSCI EM
P/E
MSCI Turkey
MSCI EMEA
MSCI EM
Int. Rates & FX
CB Policy Rate
G-Bond Yield +
Eurobond Yield ++
5 yr. CDS
US$ / TRY
EUR / TRY
Macro Indicators
GDP, $ bn, nom.
GDP Growth
CPI
Current Acc./GDP
Public Debt/GDP
Budget Bal./GDP
Country Rating
L-T FC borrowing
last
76.086
1.773
242
1.070.078
315
950
∆ w/w
-0,2%
-3,0%
∆ y/y
23,1%
-0,5%
0,3%
-0,2%
23,1%
-0,4%
1,5%
2011E
9,7
7,6
11,5
2012F
10,1
8,2
10,5
2013F
9,5
7,9
9,4
last
wk. ago
4,50%
4,50%
8,83%
8,95%
5,64%
5,92%
186
204
1,914
1,933
2,519
2,526
yr. ago
5,75%
7,77%
4,97%
202
1,808
2,198
2011A
771
8,8%
10,4%
-9,7%
39,9%
-1,4%
S&P
BB+
2012E
795
2,2%
6,2%
-5,9%
37,5%
-2,0%
Moody's
Ba1
2013E
875
3,5%
6,7%
-6,7%
36,1%
-2,2%
Fitch
BBB-
* last 5 days' average
+ benchmark
++ eurobond, 14/01/2041 maturity
Upcoming events
Consumer loan stats (26th week of 2013) – Jul 22nd
MPC meeting – Jul 23rd
Number of arriving-departing foreigners and citizens
(Jul’13) – Jul 23rd
Sectoral confidence indices (Jul’13) – Jul 25th
Business tendency survey (Jul’13) – Jul 25th
Capacity utilisation rate (Jul’13) – Jul 25th
Consumer confidence index (Jul’13) – Jul 29th
Consumer loan statistics (27th week of 2013) – Jul 29th
July 22, 2013
Non-residents' Bond Holdings and Consumer Loan Growth. During the week ending 12 July, foreign bond holdings
decreased USD 0.6bn, despite USD 0.3bn increase in repo holdings. The outflows were broad-based across maturities;
however, bulk of the outflows was from 2014 and 2022 bond holdings which declined TRY 0.9bn and TRY 0.5bn, respectively.
In the same week, consumer credit growth on 13-week moving average basis continued to accelerate (0.4pp) and reached
39.6%.
Unemployment rate declined despite increasing participation rate. In April, both unemployment rate and non-farm
unemployment rate declined by 0.8pp to 9.3% and 11.5%. On a s.a. basis, unemployment rate (9.4%) and non-farm
unemployment (11.7%) rate remained flat while participation rate increased 0.2pp to 51.3%. Industry and services sectors
accounted for the bulk of the non-farm employment creation, contributing 82k and 53k to the employment, respectively, on
a s.a. basis. Overall, non-farm employment increased 140k. Employment creation in the construction sector remained
marginal (5k).
Gasoline price hikes. The government announced TL0.08 increase to gasoline prices on top of TL0.11 increase on July 9.
Assuming prices remain flat from here, the average gasoline price will be 2.5% higher on average this month. This would add
0.1pp to inflation.
PM Erdogan against credit cards. PM Erdogan reportedly said in a speech that credit cards should not be used because
private banks have been charging a significant amount of fees. He said that a certain bank, without providing a name,
recorded TRY600m revenue in fees a year while three public banks combined recorded the same amount.
Cukurova Holding asks for an extension. Bloomberg reported that Cukurova Holding applied for an extension (was granted
60 days in a recent decision) for the USD1.56bn payment to Alfa Telecom to recover its 13.9% controlling Turkcell stake.
Reportedly, Cukurova Holding wants to wait for the result of its appeal pending at a US court. The case is related to liabilities
to TeliaSonera, Cukurova Holding. The Privy Council Board will hear oral submissions on these points from the parties on July
23.
Potential NPL risk in banking sector. According to daily Taraf, a large conglomerate is having repayment problems (total USD
2.3bn risk to the banking system).
Dynamic growth fund sold its shares in Ulker Biskuvi. Dynamic Growth Fund sold its 21.41% stake in ULKER at TRY
13.75/share to Yildiz Holding and its participations due to the liquidation of the fund. Combined stake of Yildiz Holding, its
participations and Ulker family increased to 79.9% from 58.49% with the sale.
Regulation of bank fees. Banks have agreed with the BRSA to make term-life insurance a non-mandatory product for its
credit customers, to remove fees charged on some services completely, and have offered to place a ceiling on other services,
according to daily HaberTurk. According to the news the ceiling offered was deemed low by the BRSA which has asked them
to re-evaluate it.
A new player in media sector. Cengiz-Kolin-Limak Consortium acquired daily Aksam, TV news channel SKY360 and radio
station Alem FM from the Savings and Insurance Fund (SDIF) for USD60m. The SDIF seized these assets from Cukurova
Holding to collect its dues. We believe that acquisitions do not cause a remarkable change in the competitive landscape of
the media sector.
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resulting from the use of such resources.