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permanent crisis abates briefly,” Rimmer concluded.
Turkish stocks provide a strong investment case, in particular when it comes to Turkish banks, as VTB Capital believes volatility over geopolitical tensions only offers trading opportunities, Akin Tuzun of VTB Capital said on January 10 in his monthly Turkish equities monitor entitled “January to be strong despite geopolitical risks”.
“Turkey offers the highest EPS growth in 2020. Based on the Bloomberg consensus estimates, the Turkish equity market and the banks offer 44% and 52% EPS growth in 2020, by far the highest in the EM universe,” Tuzun added.
Both the benchmark BIST-100 index and the banking index are, however, close to their historical lows in USD terms, while the banking index is even well below the 2008-09 financial crisis lows, Tuzun noted.
“The Turkish lira was the worst performing and the only negative currency in December among EM currencies. As a result, it ended 2019 as the worst performing EM currency, as well as the worst since 2013... we do not expect a significant recovery in Turkish lira, nor a major turmoil, unless hit by a major escalation in the geopolitical risks,” he said.
The low global interest rate environment (with the US 10-year as a proxy) continues to support low real rates in Turkey, according to Tuzun.
“According to Takasbank, the foreign ownership in equities was falling, while the equity market was rising, in 4Q19. In our other two approaches, we have also observed a drop in foreign ownership uniquely while the equity market
44 TURKEY Country Report OUTLOOK 2020 www.intellinews.com