Page 54 - TURKRptJul19

8.3.1 Equity market dynamics
Amid a perfect chaos at all fronts in policymaking, Turkish markets are keeping to ride a roller-coaster based on ups and downs in portfolio inflows and outflows that cyclically follow each other, as Bloomberg reported on July 3 Borsa Istanbul was near its second bull market this year, just a few weeks after media reports suggested that Borsa Istanbul had entered into the bear market.
VTB Capital sounds time for “taking profits” in Turkish assets. VTB Capital believes it is not worth chasing the current rally in Turkish assets, and that in fact it is worth taking profits from a trading perspective, Akin Tuzun of VTB Capital said on July 4 in the latest release of VTB’s regular Turkey Trade Monitor report entitled “Taking profits in our trading Buy call”. Since VTB’s last Trade Monitor entitled “Buy into weakness territory” that was released on June 19, the Turkish equity market has rallied 16% in dollar terms, led by the banks, which gained 27% in USD terms. “This was a particularly strong rally in a short period of time, outperforming EM indices by 16% during that period. We believe it is not worth chasing this rally, and that in fact it is worth taking profits from a trading perspective. The banking index is at the top of our ‘Neutral’ zone and almost at ‘Sell into Strength’ territory. The short-term sentiment has indeed improved, with positive developments on both domestic and international political stages. The global interest rate backdrop also remains supportive for high beta EMs like Turkey,” Tuzun said. “Nevertheless, the risk reward is once again more balanced and thus it makes sense to take profits” from the call VTB made two weeks ago, in its view.
54 TURKEY Country Report July 2019 www.intellinews.com