Turkish equities experienced an inflow of $48mn in the week ending July 7 as the benchmark BIST-100 tested a new record high of 104,915 on July 13, Turkey's central bank said on July 13.

The total equities inflow so far this year tops $2.35bn, in parallel with portfolio inflows to the emerging markets universe.

Turkish government debt securities, meanwhile, saw an outflow of $222mn last week, data from the central bank also showed. There has been an overall inflow of $3.51bn into the debt securities in the year so far.

The Turkish lira had lost 0.04% d/d against the USD to trade at 3.5691 on July 13 while the BIST-100 was up 0.39% to 104,210 at closing prices. The BIST-100 index was up 33% on an annual basis.

Turkey's financial markets have performed well so far this year. International investors have shown strong interest in Turkish assets despite the range of political and economic woes amid Turkey's extended and indefinite state of emergency.

Markets have given a positive reaction overall to the narrow 'Yes' vote for an executive presidency in the April 16 referendum. However, concerns over the future economic and political outlook are still strong. A solid set of geopolitical risks pose threats to the outlook.

Political uncertainties in the US curbed expectations for offensive rate hikes by the Fed. Consequently, portfolio inflows to emerging markets escalated during recent months.

Borsa Istanbul has enjoyed overall capital inflows across this year so far. Markets, however, are suspicious that an unknown big fund trading with algorithms - “The Dude” as local traders refer to it - is behind the unexplained rally that has taken place since the beginning of 2016.

Meanwhile, in a pyschological ploy, Borsa Istanbul is considering cutting the last two digits from the BIST-100 index and is discussing the issue with local market participants, Himmet Karadag, head of the stock exchange, announced on June 20.

Borsa Istanbul last lopped two digits from its benchmark index at the beginning of 1997 when the index closed in on six figures. The rebasing triggered a 64% m/m jump in the BIST-100, with the index rising 254% y/y by the end of 1997.

The World Bank is forecasting a quickening of Turkey's annual inflation to 9% at the end of 2017 from last year’s 8.5% while the OECD raised its 2017 CPI inflation forecast for Turkey to 10.4% in its June Economic Outlook forecast from its previous forecast of 7.7% given last November.

NON-RESIDENTS' HOLDINGS OF EQUITY AND GOVERNMENT DOMESTIC DEBT SECURITIES ($ mn)
(Market Value)	07/07/17	30/06/17	23/06/17	16/06/17	09/06/17	02/06/17	26/05/17
STOCK
EQUITY	47,529.80	49,100.90	48,673.70	48,180.60	47,372.60	47,433.00	46,222.10
GDDS (*)	30,385.40	31,695.60	31,365.70	31,221.60	30,118.70	30,272.00	29,802.90
Repo	2,593.50	2,679.40	2,670.00	2,745.90	2,781.00	2,735.80	2,709.50
Private Sector	892.3	916.7	926.3	911.7	881.4	886.1	872.9
NET TRANSACTONS (Adjusted for Foreign Exchange and Market Price Effects)
EQUITY	48.2	48	25.9	252	-168.4	477.4	134.4
GDDS (*)	-222.4	187.7	176.6	755.6	-88	114	472.3
Repo	0.9	-4.6	-71.5	-69.8	43.7	0	387.5
Private Sector	-24.4	-9.6	14.6	30.3	-4.6	13.2	-17.8
source: tcmb