Page 4 - TURKRptAug20
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1.0 Executive summary
Debt-fuelled consumption-based economic revival continued throughout July. There have been signs on the last days of the month that the Turkish government is taking steps to limit the latest loan growth madness.
Electricity consumption, a gauge to track industrial activity, was down by a relatively limited 2% y/y in June while July figures suggested a similar limited recovery. Turkish aviation industry was still almost idle in June.
The lira awakened with a start to face the perennial question. Is it the endgame?. Not yet. New tranche is set at 7.00 again but it does not seem too strong. An old tradition is back: offers of free market FX rates at Istanbul’s Grand Bazaar.
The central bank returned to shorting dollar futures on the Borsa Istanbul derivatives market. State lenders’ net FX deficit reached $9.7bn as of July 9. Overall interventions in the lira market since January 2019 amount to about $103bn, including $70bn so far this year. Turkey fell to 91st place of 174 countries on Euromoney global risk rankings with balance of payments fears rising.
The Treasury tapped $5.5bn from local lenders with domestic government papers.
Since May, there has been some acceleration in Turkish borrowers striking loan deals, Akbank sold $550mn of eurobonds. However, debt roll-over rates are still below 100%.
Foreign market players’ sentiment in Turkey is still deteriorating. Subsidised bank credits to buy physical gold are ‘new fashion in Turkey’. Foreigners’ share at Borsa Istanbul fell below 50%. BlackRock has trimmed some exposure to Borsa Istanbul equities citing Turkey’s likely economic trajectory in coming months.
How do Turkish banks report high profits?: Turkish banks are reportedly anxious that the “bad bank” plan for NPLs could require booking large losses. Please note that Turkish banks could distribute dividends from the 2016 profits in 2017 for the last time and they have been subject to an informal ban since then.
The banking watchdog BDDK fined seven banks. It also warned again local lenders to accept borrowers’ requests to delay repayments. Private lender Akbank was also hit with TRY156mn fine for violating ‘COVID-19’ stipulations.
Turkey Wealth Fund is ‘aiming flag carrier Turkish Airlines-led consolidation in aviation industry’
S&P withdrew Turkish consumer electronics maker Vestel Elektronik’s CCC- rating at the company’s request.
Refiner Tupras topped Fortune’s Turkey 500 list again.
Turk Telekom will distribute 25% of its 2019 profit as cash dividends.
Turkish competition authority is probing German carmakers after Volkswagen scrapped Turkey investment plan.
Ford Otosan secured $150mn loan from IFC.
4 TURKEY Country Report August 2020 www.intellinews.com
