Page 5 - TURKRptNov19

upgrade from Fitch under Section 8.4.1), are still suggesting somehow turning from the dip but no-one should be convinced that any kind of recovery is at hand before getting through the upcoming winter. And, winter has come with November.
Turks are still getting angry when they see on media reports that inflation fell to single digits​ and the economy is growing but they have already bought dollars with all their liras and dollarization seems like slowing at its peaks.
In order to overcome his economic troubles, Erdogan is still trying to employ his trademark economy policy​, namely stimulating the economy by turning on the credit taps, but such is the wretchedness out there that private lenders are still dragging their feet over extending new loans and domestic confidence in the government is still pretty much at rock bottom.
Concerns are still there about whether there will be an overshoot of monetary policy, and a renewed depreciation in the currency. However, public lenders have so far managed to defend the local currency at the cost of burning huge amounts of central bank reserves while the equity market is under an unofficial suspension with the short-sale ban introduced on the most liquid banking stocks and the lira shortages in London introduced following the new Halkbank indictment filed on October 16.
Turkish assets are even losing their attractiveness for vulture funds.
The second hearing of 'The US vs Halkbank' case will be held on November 5. ​ Another date to keep in mind is November 13. On that day Erdogan is supposed to visit the White House. If the trip proves feasible, it’s doubtful that he will go anywhere near Congress.
Domestic borrowing market remains almost idle following a series of huge mistakes since last year ​while external borrowing channels are also not promising. The 2020 is supposed to be a trouble year for the government financing. Erdogan has the power so far to order the local private lenders and pension funds to finance the government and the central bank reserves but a crowding-out for 2020 seems already in the pocket. Budget deficit is booming, borrowing plan for 2020 is up 50% y/y, it is raining tax and prices hikes and there are fresh plans to transfer more money from the central bank (or to print more money). Meanwhile, official inflation and interest rates are nosediving, lira remains stable.
The Erdogan administration has not come yet to the page of zombie companies and hidden NPLs at bank balance sheets​ from spending energy on manipulating realities or on military attractions. Living dead companies are seen to weigh on his plan to turn on credit taps to stimulate the collapsed economy. As a solution to the NPLs problem, Erdogan says “now time to pay up” to banks but banks are dragging their feet. Since 2016, banks are carrying the Turkish economy.
The “official” growth for 2019 seems to be released at slightly above zero
as forecasts are also sidelining with the finance minister’s early data releases. However, warnings as well as loan packages that flare around, meanwhile, highlight the real troubles the Turkish economy remain stuck despite the recovery observed in official data.
Syndicated loan renewals for banks progress undeterred. ​Turkish Airlines and Mersin Port ‘mandated lenders for eurobond/trust certificate issues’. (See Section 5.4)
The Q3 financials season, meanwhile, continues for Borsa Istanbul-listed corporates, but as anticipated there are no promising trades. (See Section 4.3.2) Top retailer BIM and Ford Otosan will pay additional dividends.
5​ TURKEY Country Report​ November 2019 ​ ​www.intellinews.com