Istanbul stock exchange makes further gains despite $168mn outflows

Istanbul stock exchange makes further gains despite $168mn outflows
By bne IntelliNews June 15, 2017

Turkish equities experienced an outflow of $168mn in the week ending June 9, Turkey's central bank said on June 15. However, the benchmark BIST-100 index rose 0.08% w/w to 98,943 by the close on June 9.

The total equities inflow so far this year tops $2.2bn.

Turkish government debt securities also saw an outflow of $88mn last week, data from the central bank showed. But there has been an overall inflow of $3.06bn into the debt securities in the year to date.

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.

The Turkish lira had lost 0.90% d/d against the USD to trade at 3.5180 as of 15:10 local time on June 15 while the BIST-100 was down 0.96% to 98,676.

The BIST-100 tested a new record high of 100,001 on June 13 and it was up 27% y/y as of 15:10 local time on June 15.

Better-than-expected Q1 GDP growth data released June 12 supported the performance of Turkey's financial markets. However, a solid set of geopolitical risks, which now also includes the Qatar crisis, pose threats to the outlook.

Political uncertainties in the US over President Donald Trump’s future 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.

End-2017 Turkish inflation expectations have risen from 9.53% in May to 9.55% in June. In April, Turkey’s central bank revised up its end-year inflation expectation for 2017 to 8.5% from its previous forecast of 8%.

The World Bank is forecasting a quickening of 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.

(Market Value) 09/06/17 02/06/17 26/05/17 18/05/17 12/05/17 05/05/17 28/04/17
EQUITY 47,013.70 47,068.60 45,869.70 44,587.70 44,560.40 43,895.00 44,118.30
GDDS (*) 30,118.70 30,272.00 29,802.90 29,228.70 28,651.80 28,570.80 28,748.70
Repo 2,781.00 2,735.80 2,709.50 2,319.80 2,315.00 2,338.50 2,336.50
Private Sector 881.4 886.1 872.9 890.7 887.8 884.7 882.9
NET TRANSACTIONS (Adjusted for Foreign Exchange and Market Price Effects)              
EQUITY -168.4 477.4 134.4 13.9 223.4 52.2 129.4
GDDS (*) -88 114 472.3 490.8 263 -378.3 739.4
Repo 43.7 0 387.5 1.3 -0.9 -15.2 15.1
Private Sector -4.6 13.2 -17.8 2.9 3 1.9 30
source: tcmb