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bne Turkey Daily ListExecutive Summary:
This is bne's Turkey daily newsletter, a list of the top stories in the country this morning. To manage your delivery options: click here: | ||
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| 1. Privatization of Turkey's Baskent Dogalgaz failed once again |
| Balkans.com |
| April 27 2012 The privatization of an 80 percent stake in Ba?kent Dogalgaz, Ankaras natural gas grid, failed once again yesterday, when none of the bidders put out written bids. Ahmet Aksu, vice president of Turkeys Privatization Administration (OIB), said the tender will most likely be called off as there were no offers which surpassed the starting bid of $626 million from any of the competing firms, Hurriyet Daily reports. |
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| 2. Ro-ro trips between Turkey and Egypt begin |
| bne |
| April 27 2012 Earlier this week bne reported that Turkey is finally having success with an alternative transport route to the Gulf countries that would replace the Syrian route. Yesterday the first ro-ro boat trip from Turkish town Mersin to Egypt finally sailed, according to WorldBulletin. The opening ceremony was held in Mersin with Turkey's Economy Minister Zafer Caglayan attending the festivities. "Despite political and economic crisis in different corners of the world, Turkey was writing a success story with its political and economic stability," Caglayan said at the ceremony. Turkey has the second largest growth rate in the world, the minister reminded. And despite the Arab Spring, Turkey's exports to the Middle East reached record figures last year, Caglayan said. "Today, we thank the Transportation Minister of Egypt. We have talked with him day and night wherever we were. The Egyptian minister contributed to the agreement we signed with Egypt. Now, thanks to the agreement, we have begun the first ro-ro trip. These trips will contribute to the Turkish-Egyptian trade volume and our export products will reach Saudi Arabia in 3-4 days. We will never leave our exporters alone," Caglayan stressed. |
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| 3. Turkish inflation stays stubbornly high |
| Danske |
| April 27 2012 Turkish inflation remains elevated Turkish inflation remains stubbornly high and we even expect inflation to have inched up to 10.6% y/y in April, from 10.4% y/y in March. However, looking ahead, we expect inflation to ease somewhat towards the end of the year. Hence, for now we expect inflation to have peaked in April and fall to around 7% in December. However, this is still somewhat above the Turkish central banks (TCMB) 5% inflation target. That said, as long as the outlook for growth is uncertain and inflation is set to inch down, we doubt the TCMB will become more aggressive on monetary policy tightening going forward. CEE PMI heading lower again We have already seen quite disappointing PMI numbers for the eurozone countries in April and we expect the fall in eurozone PMIs to be replicated in the PMI numbers in central and eastern Europe. Hence, we expect falls in the April PMI numbers across the EMEA region when the numbers are published in the coming week. That said, overall the manufacturing sectors in the region are holding up relatively well and we are not yet at recessionary levels. Furthermore, we expect the numbers to have very little market impact. CNB set to remain on hold The performance of the Czech economy continues to disappoint and over the last couple of weeks political concerns have been increasing following a dispute in the government about new austerity measures. However, public finances in the Czech Republic are overall in fairly good shape. On the other hand, growth is extremely weak and it is very hard to see any inflationary pressure. We therefore believe that there is plenty of room for monetary easing in the Czech Republic, especially taking into account that the Czech government is now pushing through further austerity measures. However, this is certainly not the view of the majority of members of the Czech central banks board. Here, the majority still seem to worry more about perceived inflationary risks. Therefore, we do not expect any major change of communication when the CNB board meets next week and we expect the CNB to leave its key policy rate unchanged at 0.75%. This is the consensus and the decision should therefore not have a major impact on the Czech markets. Lithuanian GDP expected to decelerate to 3.5% y/y The Lithuanian first flash estimate of first-quarter GDP is due to be released next week. We estimate GDP growth decelerated further to 3.5% y/y, down from 4.4% y/y in Q4 11, but remain robust. The negative effect of recession in the euro area is not yet being felt in Lithuania. This would result in a favourable export structure, with Lithuanias main export partners Russia, Germany and Poland still holding up relatively well and are unlikely to suffer from a recession. This is confirmed by relatively good industrial production results in the first quarter of this year; industrial production in Lithuania increased by 3.9% y/y. However, for the all-year results our optimism remains moderate. The general slowdown in external demand caused industrial output to slow down as well and GDP growth is set to decelerate to 2.7% y/y, as decreased optimism in export markets has a negative spillover effect on domestic demand. |
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| 4. Turkey starts drilling in Northern Cyprus |
| bne |
| April 27 2012 The Turkish Petroleum Corporation (TPAO) begun its first exploratory oil and gas drilling in North Cyprus, according to local media reports. Several high ranking officials, including Turkish Energy Minister Taner Yildiz, Turkish Cypriot President Dervis Eroglu attended the opening ceremony on Thursday. "We will explore our own oil and gas. I have to admit that only one in a thousand drilling explorations become successful. This particular well may fail us, but it is part of a wider exploration effort that will also provide us with a detailed underground map of northern Cyprus," Yildiz said at the ceremony. According to Yildiz, Turkey has gotten some "indirect" offers related to the drilling project. "But currently the counterpart of the Greek Cypriot party is Turkish Cyprus. We are not considering technical work free from political developments." The rights of Turkish Cypriots would be defended all the way, said Eroglu at the ceremony. "We are living another historic day. Another ring with highly strategic importance adds to the chain of brotherhood, the unity of hearts and cooperation," the Anatoila news agency quoted him as saying. "Energy issues are a reason for war across the world, but they will be a reason for peace on this island," Yildiz said. The news brought a fast response from the government of Cyprus, which labeled the action as illegal. "Turkey and the Turkish Cypriot leadership are violating the law by going ahead with drilling in the occupied are of Famagusta The drilling being carried out by Turkey and the Turkish Cypriot leadership demonstrates a lack of willingness on their part to achieve a solution to the Cyprus problem," Agence France-Presse quoted Greek Cypriot government spokesman Stefanos Stefanou as saying. "The [Greek Cypriot] government is making the appropriate representations and demarche against this new illegal act." |
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| 5. Car companies see lucrative quarter |
| Hurriyet Daily News |
| April 27 2012 Germany's Volkswagen, Europe's largest car maker, posted dramatic profit figures for the first three months of the year as Asian rivals Mitsubishi and Hyundai did not lag behind. Volkswagen said yesterday its first quarter net profit nearly doubled 3.19 billion euros ($4.2 billion) from 1.71 billion euros in the same period the year before following a big spike in sales. Click to read more |
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| 6. CEE Banks |
| Erste |
| April 27 2012 Valuation: Following the early 2012 rally with a performance of our CEE bank coverage of 16% in January, the market turned to cautious mode again since February. Although in negative territory with -5.6% (1m) and - 2.7% (3m) the CEE banks have been outperforming the banks in the Eurozone with their -21% and -18%, respectively. At current valuation levels with an average of 0.96x BV12e and 8.5x EPS12e the sector with estimated 11.4% ROE12e seems slightly undervalued. Also from the 1Q12 reporting season we do not expect negative surprise potential. On the other hand, the slowing economies might trigger increasing risk costs with some delay and slowing loan growth during the course of the year. Maybe a little too early to look at 2013 but this would be a positive trigger not only for CEE banks. CEE Banks 1Q12e: Following the good 4Q11 performance in the Polish banking sector, we expect the bottom line of Polish banks to maintain annual growth rates of 9-20% in 1Q12. This is mainly due to stable asset quality causing normalized provisioning levels as well as still good but diminishing loan growth dynamics ranging from 6% (PKO BP) to 17% (Pekao). The latter might result in 8-19% annual top line growth but net fee & commission income may further decrease due to the weak brokerage and mutual funds business. Komercni banka and the Hungarian banks OTP and FHB will show the strongest sequential profit improvements. But this is mainly due to the absence of negative one-offs which hit 4Q11 (Greek bond write-downs at Komercni, losses on early FX repayment at OTP, FHB). National bank data 1Q12: The data of local central banks indicates slowly growing or stagnating loan volumes in 1Q12 vs. year-end 2011. In the Czech Republic corporate loans are the only sequentially growing segment, whereas housing loans are flat and consumer loan demand is further diminishing. In Poland the weaker loan volumes are also caused by the impressive comeback of the Polish zloty vs. the euro and the Swiss franc, which, together with further diminishing consumer loan demand may result in sequentially-lower retail loan volumes. Corporate loan growth trends (+3.2% q/q in 4Q11) should, however, continue in 1Q12. In Hungary we see decreasing volumes mainly due to the early FX repayment scheme with customer loans coming down 7% q/q. Lending stagnated also in Romania in the first two months of 2012 (-0.34% YTD), with the scarce demand for new loans expected to persist at least up to the middle of the year. In Serbia the trend of credit policy tightening continued into 1Q12 but gross loans increased 5% YTD. Considering the fact that around 70% of loans are linked to FX (of which 82% to the EUR), the nominal growth actually came from 5.3% local currency depreciation vs. the euro. |
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| 7. Top European lenders post discouraging results |
| Hurriyet Daily News |
| April 27 2012 A grim economic backdrop and regulatory reforms remain a drag on top European banks, with a number of them posting weak figures for the first quarter of the year. Spain's Santander is particularly exposed to the eurozone's troubles, and its first-quarter results suffer from provisions taken on property loans that have soured during Spain's property market crash. Click to read more |
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| 8. INTERVIEW: Avtovaz's last stand |
| bne |
| April 27 2012 Avtovaz based in the Volga basin city of Togliatti, named in honour of the Italian communist who set up Russia's biggest car plant, is the archetypal Soviet dinosaur. The ubiquitous Lada is a knock-off of the Fiat 124 that was fashionable in 1980 and has been losing ground to the flood of foreign brands that are increasingly being assembled in Russia. Igor Komarov took over as president Avtovaz in 2009 and has made dramatic progress in dragging the plant-cum-city into the modern world. But observers worry he is fighting a losing battle, as the automaker will never be able to keeps its head above the rising tide of competition, even with a soon-to-be-concluded deal to sell a controlling stake to Renault-Nissan. The youthful and ebullient Komarov replaced Vladimir Kadannikov, the chain smoking and stolid boss who'd worked at the company since 1967, and set about modernising the company's mindset. Komarov called in the consultants and drew up a plan of action two years ago that he hopes will capitalise on the advantages that Avtovaz still enjoys. "Russia has a huge potential. The number of cars on the road is huge, while the number of sales is very low: if you take the ratio of these two numbers, then Russia is well behind the rest of Europe," Komarov told bne in an exclusive interview held at the Adam Smith annual Automotive Russia conference, the industry's premier event. Click to read more |
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| 9. Armenian, Turkish locals in court over land rights |
| Hurriyet Daily News |
| April 27 2012 An Armenian community that was forced to vacate their villages in the southeastern province of Batman 25 years ago due to politically motivated violence in the region has mounted a legal battle to retrieve disputed land. "They could not retrieve their homes and land when they decided to return back. The Directorate of Land and Cadastre has forged illegal documents on behalf of those who occupied [the properties]," lawyer Seyhmus Kabaday, who represents the villagers in court, told the Hurriyet Daily News. Click to read more |
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| 10. Uludere raid papers requested in Turkey |
| Hurriyet Daily News |
| April 27 2012 Parliament's Human Rights Commission has requested documents and information regarding December's botched Uludere airstrike from the prosecutor handling the probe, Commission Chairman Ayhan Sefer Ustun said yesterday. The investigation into the strike, which killed 34 civilians that had been mistaken for Kurdish militants at the Iraqi border on Dec. 28, 2011, has been handled by a special-authority prosecutor in the southeastern city of Diyarbakir. Click to read more |
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| 11. Violence is no cause for divorce, say Turkish women |
| Hurriyet Daily News |
| April 27 2012 A recent survey conducted by the Ministry of Family and Social Policies shows that almost 20 percent of Turkish women do not consider violence and beating as reasons for divorce. The survey, called "Family Structure in Turkey," also showed that 26.6 percent of divorced women's motivation to end their marriage was irresponsible and apathetic behavior by their husbands. The survey also revealed that 20.8 percent of women decided to divorce because of maltreatment and beating. Click to read more |
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| 12. Turkey hopes Iraq to repair fences |
| Hurriyet Daily News |
| April 27 2012 Ankara sees no further future escalation in tensions with Iraq, and believes Iraqi Prime Minister Nuri al-Maliki will launch reconciliation talks with other Iraqi groups to end the country's political crisis, Turkish Deputy Foreign Minister Naci Koru said yesterday. "We've signed agreements with the Iraqi central government, which are still in force. Our commercial relations are continuing intensively. Therefore, I hope that those recent confusions and negative remarks will not go further," Koru said in an interview with the A Haber television channel. Click to read more |
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| 13. Turkey owns, leads, serves to new Mideast:' Davutoglu |
| Hurriyet Daily News |
| April 27 2012 Turkey is set to carve itself a primary role in shaping the Middle East as it guides the "winds of change" in the region, Foreign Minister Ahmet Davutoglu said yesterday. "A new Middle East is about to be born. We will be the owner, pioneer and the servant of this new Middle East," Davutoglu told Parliament after attracting criticism from opposition parties over Ankara's Syria policy. Click to read more |
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| 14. Turkeys Central Bank announced inflation report |
| Erste |
| April 27, 2012 The CBT announced its second Inflation Report of the year yesterday and surprisingly did not change the end-year official forecast of 6.5% for this year but made a slight revision to 2013 forecast from 5.1% to 5.2%. This is somewhat contrary to the upward revision in CBT's oil assumption to USD 120 from USD 110 especially when considered every USD 10 adds another 0.4pps on top of existing inflation. In an environment where we see no massive capital inflows to emerging markets, CBT's commitment to its current forecast points to further tightening via repo transactions and/or FX interventions which are less likely, absent an immediate surge in exchange rates. USD/TRY and exchange rate basket currently hover quite below its previous intervention levels above 1.8 and 2.15. CBT made a slight revision to its credit growth expectation to 14% from 15%, mainly on the back of additional slowdown it expects in domestic demand, following further tightening. |
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| 15. Turkish Central Bank kept its end-2012 inflation forecast unchanged at 6.5% |
| TEB |
| April 27, 2012 The forecast range is 5.3% and 7.7% with 70% probability where 6.5% represents the midpoint. Similarly, 2013 inflation forecast was broadly kept constant at 5.2% (with a forecast range of 3.4-7.0%). Official inflation targets for both years remain at 5%. In response to the existing high levels of inflation and the recent deterioration in inflation expectations, the CBRT would resort to additional tightening more frequently The governor noted once more that the direct impact of the utility price hikes in April would be 0.5pp on inflation. In addition, the CBRT raised its 2012 average oil price assumption to USD 120/bbl from USD 110/bbl, while keeping the food inflation expectation unchanged at 7.5% for year-end. Against this backdrop, the CBRT did not revise its inflation forecast but instead noted that it could resort to additional tightening more frequently. This would reduce the credit growth to 14%, from its previous assumption of 15%, the bank argued. Overall, the Governor maintained a hawkish tone throughout the press conference and sounded more committed to the year-end forecast of 6.5%. The bank will maintain its wide interest rate corridor and does not hint any change to the current policy framework The CBRT once more emphasised that the ongoing uncertainties in the global economy required the maintenance of a flexible approach in monetary policy against possible volatilities in capital flows. Governor Ba? also stated that the bank would maintain the shape of the yield curve inverted for some time. This, in turn, implies that the bank is keen on maintaining liquidity conditions tight for longer. The CBRT relies on exchange rate appreciation to bring inflation under control The recent rise in utility prices and higher global energy prices clearly increased the upside risks to the CBRT's inflation forecast. We maintain our inflation forecast at 7.5% for end-2012. Exchange rate appreciation seems to be the main tool of the CBRT to bring inflation under control. Accordingly, if global conditions allow the bank would not stand in the way of further TRY appreciation, in our view. At the same time, the bank's pain threshold for a slowdown in growth is very low as the bank broadly maintains its credit growth rate forecast. Hence, the tightening in "regular days" would not be excessive and we expect the bank to maintain its weighted average cost of funding at 8-8.5% range in regular days and recourse to additional tightening through pushing rates to the ceiling rate when TRY faces depreciation pressure. Barring a positive shock on food prices, the bank is unlikely to achieve its forecast. We continue to believe that in order to anchor inflation expectations towards its target of 5%, the bank needs to adopt a more transparent, simple, and predictable monetary framework. |
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| 16. Albaraka Turk has become the first Turkish participation bank to open a branch in Iraq |
| Balkans.com |
| April 27 2012 Albaraka Turk has become the first Turkish participation bank to open a branch in the city of Arbil in northern Iraq. The bank also plans to branch out to Qatar, Bahrain and Dubai in the near term and Europe, specifically Germany, Albania and Bosnia , in the medium term. We are in Iraq to increase the presence of Turkish firms in the region, to support the development of the region and to modernize the Middle East, Albaraka Turks general manager, Fahrettin Yahsi, told daily Hurriyet. Yahsi said Arbil was the most developed region in Iraq and on the brink of a re-birth, adding that Albaraka Turk was there to help the city reach its target of becoming a future Dubai, Hurriyet Daily reports. |
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| 17. Turkish TAI upgrades T-38 trainer for air force |
| Hurriyet Daily News |
| April 27 2012 The Turkish Airspace Industries (TAI) has upgraded the Turkish Air Forces first aging T-38 advanced fighter aircraft and delivered it to the force, the company has announced. A statement released by the company said that it will be upgrading the Turkish Air Forces total of 55 aircrafts under a contract for the Design, Development and Avionics Modernization of the T-38s with the Undersecretariat for Defense Industries (SSM). Click to read more |
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| 18. Turkey's Erdemir expects sales volumes this year will be near 2011 levels |
| Balkans.com |
| April 27 2012 Turkey's largest flat steel maker Erdemir expects sales volumes this year will be near 2011 levels, but lower prices are seen dragging down profits, its board chairman told Reuters. "We will try to keep our sales volume in 2012 close to 2011 numbers, but profits will be lower than 2011. First quarter results indicate difficulty in achieving last year's profits," board chairman Fatih Tar said. |
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| 19. Turkeys Ford Otosan to disclose 1Q12 financial results today |
| Erste |
| April 27, 2012 We expect Ford Otosan to report TRY 147mn net profit for 1Q12 (consensus: TRY 138mn), TRY 2,297mn in revenues (consensus: TRY 2,206mn) and TRY 209mn EBITDA (consensus: TRY 199mn), with a 9% EBITDA margin for 1Q12. The company sold 18.6k vehicles in the domestic market (down 35% y/y) and exported 55.4k vehicles (up 9% y/y) in 1Q12, representing a y/y decline of 7% in total unit sales. However, we expect 3% y/y growth in revenues for the quarter, thanks to increased vehicle prices, as well as a weak TRY. While we expect a 7% y/y decline in adjusted EBITDA in 1Q12, we also project a y/y contraction in the EBITDA margin, from 10% in 1Q11 to 9% in 1Q12. |
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| 20. Turkish Turkcell is due to report 1Q12 results on 2 May |
| Renaissance Capital |
| April 27 2012 We expect moderate QoQ performance at the top line, as 1Q is seasonally the weakest quarter for telcos. In Turkey, ongoing intense competition affected mobile business performance in 1Q12. As most of the pressure came from Vodafone, we believe it has mainly affected Turk Telekoms Avea, with Turkcell faring better due to its higher-value subscriber base. Turkcell focused on value-added products, along with the pursuit of post-paid subscriber growth, smartphone sales and data products, and introduced several initiatives to improve customer loyalty and motivate dealer cross-selling. Overall, we expect Turkcell again to post better performance in mobile vs Avea, and forecast an ARPU decline of only 2% QoQ, vs a 4% decline for Avea. We expect consolidated EBITDA to be broadly stable QoQ, with margins close to management guidance (we forecast 29.2% in 1Q12 for the Group, vs 28.7% in 4Q11). The bottom line in 1Q12 is likely to be healthier than in 2011, when it was considerably affected by FX and impairment of the Belarus business (TRY600mn revaluation in 2011), and we forecast that it will reach almost TRY400mn. We think Turkcell is currently oversold, having underperformed Turk Telekom by 4% on a three-month horizon. We think the results will indicate continuing outperformance by Turkcell's mobile business over competitors, suggesting a softer competitive environment YoY. We also expect support for Turkcell from corporate developments, especially a regulatory change requiring one-third of the BoD to be independent directors, whose nominations should take place over the next two months. |
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| 21. Turkey's EUAS signed a MoU with Canadian nuclear power company Candu Energy |
| Balkans.com |
| April 27 2012 With increasing power demands from its near double-digit growth economy, Turkey wants to strengthen its hand with new partnerships in nuclear energy. In a recent move, Turkey's state-owned electricity producer Elektrik Uretim AS or EUAS (Ankara, Turkey) signed a memorandum of understanding with Canadian nuclear power company Candu Energy Incorporated (Mississauga, Ontario) regarding the construction of a nuclear plant at the Black Sea port city of Sinop. Turkey is aiming to have five nuclear power plants with a total of 20 reactors by 2030. |
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