Istanbul exchange attracts $155mn inflow, BIST-100 keeps testing nominal records

Istanbul exchange attracts $155mn inflow, BIST-100 keeps testing nominal records
By bne IntelliNews July 20, 2017

Turkish equities experienced an inflow of $155mn in the week ending July 14 while the benchmark BIST-100 tested a new record high of 107,750 on July 20, Turkey's central bank said on July 20.

The total equities inflow so far this year tops $2.5bn, in line with the scope of portfolio inflows into the emerging markets universe.

Turkish government debt securities, meanwhile, saw an inflow of $346mn last week, data from the central bank also showed. There has been an overall inflow of $3.86bn into the debt securities in the year so far.

The Turkish lira had lost 0.18% d/d against the USD to trade at 3.5280 as of 16:30 local time on July 20 while the BIST-100 was down 0.46% to 106,918 at closing prices. The BIST-100 index was up 37% on an annual basis.

Despite its nominal records, the BIST-100 is actually still far below its 51,054 record as of May 2013, which was shortly before the large-scale Gezi protests were held against the then Erdogan government. The USD-denominated BIST-100 was down 0.55% d/d to 30,380 as of 17:00 Istanbul time on July 20.

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 official 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. Some sceptics also believe that there is a lot of short-term froth in the Turkish equity market generated by an unsustainable credit boom and other measures introduced by the government amid the country's economic and political difficulties.

In a pyschological ploy, Borsa Istanbul is considering cutting the last two digits from the BIST-100 index to make stocks feel cheaper. It is discussing the issue with local market participants, Himmet Karadag, head of the stock exchange, announced on June 20.

The stock exchange 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) 14/07/17 07/07/17 30/06/17 23/06/17 16/06/17 09/06/17 02/06/17
STOCK              
EQUITY 50,457.60 47,529.80 49,100.90 48,673.70 48,180.60 47,372.60 47,433.00
GDDS (*) 31,170.30 30,385.40 31,695.60 31,365.70 31,221.60 30,118.70 30,272.00
Repo 2,633.00 2,593.50 2,679.40 2,670.00 2,745.90 2,781.00 2,735.80
Private Sector 910.3 892.3 916.7 926.3 911.7 881.4 886.1
NET TRANSACTONS (Adjusted for Foreign Exchange and Market Price Effects)              
EQUITY 155.3 48.2 48 25.9 252 -168.4 477.4
GDDS (*) 345.7 -222.4 187.7 176.6 755.6 -88 114
Repo 1.1 0.9 -4.6 -71.5 -69.8 43.7 0
Private Sector 17.9 -24.4 -9.6 14.6 30.3 -4.6 13.2
source: tcmb

 

 

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