Borsa Istanbul breaks records led by banking stocks, with the main BIST-100 Index gaining 1.33 for the day as of 16:30 Istanbul time. BIST-100 is outperforming MSCI Developing Markets Index since the beginning of the year, which has been a very rare occurrence over the last five years.
SOZCU Daily explained the reasons behind the rally as follows: While Borsa Istanbul broke a record on the first day of the week, the increase in the banking index attracted attention. Despite weak year-end financial results, the decline in CDS and foreign interest were effective in banking stock rally. On the other hand, positive reports from international investment banks also contributed to the increase.
The daily rise in the BIST Banking index exceeded 3 percent in the morning hours. The banking index, which fared in a horizontal trend in recent weeks, closed last week with an increase of 4.26 percent.
Yapi Kredi Bank: Downgrade to Hold: Risk/reward looks balanced after recent run
REASONS FOR BANK RALLY
The decrease in credit risk premium (CDS) and foreign inflows were effective in driving up banking stocks. According to experts, although the banks’ 4th quarter earnings were not very strong, the decline of CDS premiums and foreign interest increased the interest in bank shares.
Continuing the downward trend that started in February, Turkey’s 5-year CDS fell below 300 basis points as of last week.
Ziraat Investment’s Daily Bulletin explained the rally as follows:
“While the signal that interest rate hikes were stopped for the time being in the last Inflation Report presentation was an important catalyst for the stock market, it can be said that the progress in Turkey-US relations, too, supported pricing. As a matter of fact, it was observed that foreign interest in TL assets continued. As we start the new week, there are no negative developments to cloud the horizon for Turkish stocks .”
In the report, it was stated that approaching previous levels in dollar-based charts may limit momentum to some extent; while sectoral divergences may continue. Ziraat Investment research team thinks that Bank and Holding company stocks may still be on the radar of investors.
INTERNATIONAL INVESTMENT BANKS RAISE PRICE TARGETS
On Monday, Bank of America (BofA) increased its target prices for Turkish banks in its latest report. BofA raised Akbank share price target from 53.5 TL to 66 TL, Garanti share price target from 78 TL to 99 TL, Yapı Kredi share price target from 28.5 TL to 36 TL. İş Bankası C share price target was raised from 34.5 TL to 42 TL with a “buy” recommendation.
Goldman Sachs revised its target prices upwards for four Turkish banks whose shares were traded on BIST on the last business day of the previous week, while maintaining its target prices for two banks.
The US-based global bank revised its price target upwards for Akbank, Garanti, Vakıfbank and Yapı Kredi. It did not change his target price for İş Bankası and Halkbank.
Garanti BBVA Investment wrote in its morning bulletin that MSCI Turkey index, which had a negative divergence in its relative performance to the MSCI Emerging Markets index 4 times in the previous 5 years, completed only 2022 with a strong positive divergence in this period. As of 2024, MSCI Turkey index has a 17.9% positive divergence compared to MSCI GOP.
While the consensus index target of brokerage firms on Bloomberg exceeds the 11K points level for the first time with 11,029, it points to a potential upside of “+19%” compared to the current BIST-100 index level. Our expectation is that this target can be reached in the coming months.
Follow our English language YouTube videos @ REAL TURKEY: https://www.youtube.com/channel/UCKpFJB4GFiNkhmpVZQ_d9Rg
And content at Twitter: @AtillaEng
Facebook: Real Turkey Channel: https://www.facebook.com/realturkeychannel/