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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. Focusing on catalysts in Turkey |
| BGC Partners |
| May 4, 201 Range bound trading for the past three months... Following a 12% rise in January 12, Turkish equities have been stuck in a tight range between 58k and 63k for the past three months. While excess liquidity limits the downside, deteriorating inflationary outlook, persistent C/A deficit worries and perhaps more importantly, the fatigue in investor sentiment amid negative news flow from Europe capped the upside potential. MSCI-Turkey has risen by 21% YTD, outperforming MSCI-EM and MSCI-Russia by 8%. Catalysts... Potential revision in earnings estimates: - Upward revision in non financials is likely, but it is difficult to judge the direction for banks right now. We have witnessed a 4% upward revision in banking sector consensus earnings estimates as indicated by Bloomberg since January 2012. While Garanti Bank and Akbank's 1Q12 earnings have been somewhat above estimates, further upward revision appears to be difficult at this stage as NIM expansion is hard to achieve and loan growth remains under pressure. As for non-financials, strong TL is certainly good news for companies with short net FX position and better than expected top line performance in 1Q12 leads us to believe that upward revision to the earnings estimates are in the works. Weak European growth: European Central Bank's LTRO program has resolved the European banks' liquidity problem but economies are still struggling to grow given the austerity measures. The risk from Turkey's perspective is two-fold. The first one is fundamental; if European growth problems take a turn for the worse, the good start to the year in export performance may start to falter in coming months, highlighting the C/A related problems once again. The second and more sentimental issue is that the ongoing selling pressure in European banks which own 36% of the Turkish banking assets, do not bode well for the bank dominated Turkish market. Equity supply: Equity offerings have been largely put on hold but potentially large deals such as Citibank's stake sale in Akbank or Finansbank's much desired SPO as well as smaller deals such as Teknosa may soon come to the market. Potential positive surprises... Oil price is certainly a key parameter for Turkey, which imports 97% of its petroleum need. Concerns on global growth but, more importantly, the talks between Iran and developed nations on May 23 may remove some of the supply related pressure on oil price. Another important but not so imminent positive surprise could be on the inflation front. CBT's renewed commitment to tighter monetary policy is good news for TL. A lower than expected oil price combined with strong TL may provide the much needed support to CBT's inflation target, perhaps pulling the year end estimates to around 7% later in 2H12 (BGC 12YE estimate: 8.4%) What to do... Strong TL and declining long term yields are hardly bad news for equities. 10- year Turkish government bond yields declined by 54bps to 9.16% over the past month (We use 9.50% as risk free rate) As for absolute performance, we maintain our 12-month target level for ISE-100 at 67k but expect the market to remain in 58-63k range in the near term. We would be buyers should the market drop to around 56-57k, corresponding to around 9.0x PER. We believe that it is hard to justify a PER of above 11.0x for Turkish equities (currently at 9.6x 12E) because once the risk appetite vanishes Turkey will be again on the fore front posing as a risky bet among its peers. As for relative performance, we continue to believe that Turkey will outperform MSCI-EM in 2012, albeit in single digit territory. We recommend a neutral stance between banks vs non-financials in the near term and expect good stock picking as the key tool to outperform ISE-100 once again. We particularly like Emlak REIT, Tekfen Holding and Turk Traktor in this environment. Our Long-only portfolio has risen by 25% YTD, outperforming ISE-100 by 10%. |
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| 2. Turkey and Israel trading as usual |
| bne |
| May7, 2012 Trade volumes between Turkey and Israel have not been effected by the political crisis following a raid by Israeli troops on the Mavi Marmara ship that killed eight Turkish citizens and one Turkish American in May 31, 2010, reports Today's Zaman. Following the attack, Turkey's top officials declared that Israel would suffer the consequences, describing the incident as "state terror." Turkey has indeed taken some political measures against Israel, such as boycotting Israel's national day reception held by its embassy in Ankara, downgrading diplomatic relations to the level of second secretary and ceasing all military agreements. However, no economic measures against Israel have been implemented so far and business continues as usual. In 2011, the trade volumes between the countries increased significantly to an all-time high of $2bn. In 2010 the total amount of trade was only $1.36bn. Turkey's exports to Israel were at $2.4bn in 2011, up from $2bn in 2010. Tourism seems to be the only sector that has been impacted by the Mavi Marmara incident. The number of Israeli tourists visiting Turkey was around 80,000 in 2011, which is almost 30% less than in 2010. However, this might be changing soon since Israeli officials recently announced that they have downgraded their travel warning on Turkey. Murat Bilhan, vice chairman of the Turkish Asian Center for Strategic Studies (TASAM), does not see anything wrong with the flourishing trade between the two countries. "In international relations, you need to separate trade from politics," he told Today's Zaman. Atilla Sandikli, chairman of the Wise Men Center for Strategic Studies (BILGESAM), agreed with Bilhan:. "The incident is a political one, and the struggle continues within this context." |
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| 3. Turkey's search for oil and gas in Cyprus to cost $250m |
| bne |
| May 7, 2012 The cost of searching for oil and gas on Turkey's section of the divided island of Cyprus will be around $250m, says Turkey's Energy Minister Taner Yildiz, according to a report in local daily Sabah. In late April, Turkey's cabinet gave its approval for Turkey's state-run oil firm to carry out oil and gas exploration in six offshore areas around Cyprus. The decision drew condemnation from the Greek Cypriot government which lays claim to the territory. "The decision by Turkey to grant oil licences in areas which come under the EEZ of the Republic of Cyprus are a continuation of her actions which violate international law, and, specifically, the law of the sea," Cyprus' government spokesman Stefanos Stefanou said, according to Reuters. "The government of the Republic of Cyprus condemns these actions and the provocations of Turkey and is taking all indicative action to defend the country's sovereign rights," he added. In 2011 Turkey's state oil company Turkiye Petrolleri AO signed an exploration and production sharing agreement with Royal Dutch Shell Plc (RDSA) for blocks off Antalya, Yildiz said according to Sabah. Turkey's search for oil and gas is a response to the Greek side starting gas drilling operations in the island's southeastern waters in late September last year. Turkey has opposed the Greek Cyprus' drilling project fiercely. The exploitation of natural resources is a fundamental right of a sovereign state, Cypriot president Demetris Christofias said in response to Turkey's objection during a meeting in London late September. Turkey, the only country that recognizes Northern Cyprus, wants all the natural resources to be shared equally between the northern Turkish and the southern Greek parts of the island. According to an estimate based on the American Noble Energy's test drilling, the discovered gas field by the coast of Cyprus contains an estimated 140-230bn cubic meters of natural gas. Already 1bn cubic meters of gas would be sufficient to meet the island's energy needs for 30 years, say Cyprus' authorities. |
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| 4. Turkey's PM visits Syrian refuge camp |
| bne |
| May7, 2012 Turkish Prime Minister Tayyip Erdogan payed a visit to the Syrian refugee camp near the Turkey's town of Kilis on Sunday. Erdogan addressed the refugees standing on top of a bus while military snipers watched from rooftops. The minister received a hero's welcome at the Kilis camp with many refugees yelling slogans such as 'long live Erodgan', according to media reports. This is the first time Erdogan is visiting the refugees since Turkey opened its doors to Syrians feeding the violent uprising. Turkey is currently providing shelter to more than 23,000 Syrian refugees, Erdogan said during his visit to the camp. Around 9,000 Syrians are staying at Kilis camp. "Bashar is losing blood day by day," Erdogan said. "Sooner or later, those who have oppressed our Syrian brothers will be accounted for before their nation. Your victory is close." However, a United Nations monitored ceasefire has not do much to secure peace in Turkey's southern neighbor and the fighting continues in eastern Syria. Syrian soldiers have also fired at refugee camps on the Turkish-Syrian border several times, according to local media. The Syrian army wounded six people in the refugee camp on the Turkish side on April 9th. More than 9,000 people have died so far in the year-long conflict. |
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| 5. Growth versus austerity in euroland |
| Deutsche Bank |
| May 7, 2012 In the present public discussion of economic adjustment in the euro area growth and austerity are often seen as competing objectives. In our view, however, this view is based on a rather mechanistic concept of economic growth. At the root of the recession in the euro area is a lack of confidence in the ability of individual countries to achieve the necessary economic flexibility required for a monetary union of regions with divergent economic developments and in the capability of EU institutions to manage the present crisis. The restoration of confidence is essential to end the recession and return to economic growth. The question therefore is not whether to give priority to fiscal austerity or economic growth but to find the optimal degree of austerity and structural reforms for the maximisation of confidence. In this regard, we consider the glass half full: Economic policies in Spain and Italy are going in the right direction and there has been considerable progress towards establishing a crisis management mechanism for EMU. However, much still needs to be done. Governments in Spain and Italy have to stay the course and the new government of France has to join the club of reformers. Moreover, the inconsistent two-level crisis management system, i.e. strict EU/IMF fiscal policy and unlimited ECB monetary policy, has to be turned into a consistent and effective regime. In our view, 2012 will be the decisive year for the future of the euro. At present, we still see a good chance for a successful stabilisation and consolidation of EMU. |
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| 6. Risk appetite struggles to bloom as data from Eurozone chills investors |
| EPFR |
| May 7, 2012 With elections in France and Greece ahead and dire manufacturing data from Italy and Spain behind, investors erred on the side of defense going into May. The week ending May 2 saw flows into EPFR Global-tracked US Equity and Bond Funds jump to seven and 23 week highs respectively while Consumer Goods Sector Funds post their biggest weekly inflow in over two years. Redemptions from Europe Equity Funds, meanwhile, exceeded $1 billion for the sixth straight week and Europe Bond Funds extended their current outflow streak to four consecutive weeks. Investors did commit another $1.84 billion to High Yield Bond Funds, steer $540 million into Emerging Markets Bond Funds and snap Emerging Market Equity Funds' three week outflow streak. But even here they did not stray too far from the perceived safety of the world's biggest economy. Over 85% of the flows into all High Yield and Emerging Markets Bond Funds went into US High Yield and EM Hard Currency Funds respectively while Mexico, the major emerging market most tightly correlated to the US, stood out among the EM country funds. Overall, EPFR Global-tracked Bond Funds took in a net $7.1 billion while Equity Funds absorbed $3.8 billion. Both of those totals were seven week highs. US Money Market Funds posted outflows for the 10th week in a row. This week those redemptions were not offset by the modest inflows recorded by their European counterparts. Emerging Market Equity Fund Flows Faith in the US economy helped EPFR Global-tracked Emerging Market Equity Funds end their three week outflow streak in early May, with Latin America Equity Funds recording their first weekly inflow of the second quarter despite a 10th consecutive week of retail redemptions and the diversified Global Emerging Markets (GEM) Equity Funds taking in over $350 million. Investors remained leery of Emerging Asian markets and their export stories as a key market, the European Union, slides deeper into recession. China Equity Funds recorded outflows for the fourth time in the five weeks quarter-to-date while Korea Equity Funds saw YTD outflows push past the $1 billion mark. Two of the region's smaller markets did, however, continue to attract fresh money. Thailand's recovery from last year's major flooding has helped Thailand Equity Funds post inflows all but one week YTD while expectations that more outsourcing work will move from China are reflected in Vietnam Equity Funds' 18-week inflow streak. Among the funds investing in Latin America, those dedicated to Mexico stood out: the $101 million taken in by Mexico Equity Funds was the most in nine weeks and was four times as much as the next best group, Brazil Equity Funds, which also benefited from the relative strength of the US recovery. Europe's economic troubles weighed on most of the fund groups within the EMEA universe. Russia Equity Funds recorded back-to-back weekly outflows for the first time since December while Emerging Europe Equity Funds extended their current redemption streak to 12 consecutive weeks. Developed Market Equity Fund Flows The final week of April saw US Equity Funds snap a six week outflow streak as investors looked for cover from events in Europe and responded to another better than expected corporate earnings season that propelled one benchmark equities index to a four year high. Global Equity Funds also benefited, posting their biggest weekly inflow since the third week of September, as investors pulled another $1.2 billion out of Europe Equity Funds ahead of elections in France and Greece that could fracture the existing consensus in support of greater fiscal discipline. The outflows from Europe Equity Funds were concentrated among those dedicated to German equity. Investors have pulled money out of Germany Equity Funds every week since mid-March, with net redemptions over that period exceeding $4.7 billion as evidence mounts that the economic weakness along the European Union's southern tier is spreading to its core. Italy, Ireland and Spain Equity Funds again attracted small, contrarian inflows during a week when Standard and Poor's boosted Greece's credit rating. Japan Equity Funds also posted inflows as investors looked beyond the latest macroeconomic data, focusing instead on a corporate earnings season they expect will reflect the benefits for exporters of a more competitive yen. YTD these funds have posted outflows of $165 million versus inflows of $2.3 billion during the comparable period last year. Flows into US Equity Funds were centered on a handful of Large Cap ETFs as funds managed for growth handily outperformed their value counterparts across all capitalizations. Retail investors again opted to cash in, rather than join, the latest rally: they have now redeemed money from US Equity Funds every week since early July. Both of the major diversified fund groups posted inflows for the third week running. The $679 million absorbed by Global Equity Funds was a 32 week high. Sector Fund Flows Flows into EPFR Global-tracked Sector Funds took a turn for the defensive during the week ending May 2 as headwinds for Europe continue to build. Consumer Goods Sector Funds saw by far the biggest inflows, with Healthcare/Biotechnology, Infrastructure, Telecoms and Utilities Sector Funds a11 taking in fresh money during the week. Flows into Consumer Goods Sector Funds exceeded $1 billion for the first time since late 1Q10. "There's been some good retail data recently," noted EPFR Managing Director Brad Durham, "and it's not as overbought as some of the other sectors, such as Utilities and Telecoms, with good defensive qualities." Healthcare/Biotechnology Sector Funds enjoyed their best week since early January, with investors' focus continuing to shift from biotechnology plays to more conventional healthcare companies. Fund groups associated with growth for the most part recorded outflows ranging from $357 million for Commodities Sector Funds to $11 million for Financial Sector Funds. Most of the redemptions from the Commodities Sector Funds were attributable to those specializing in gold and precious metals. Funds with an agricultural commodities mandate also saw outflows for the fifth straight week and 14th time in the 18 weeks YTD. Bond Fund Flows Going into May US Bond Funds continued to absorb the lion's share of the money committed to all EPFR Global-tracked bond funds as elections in France and Greece look set to test some of the assumptions underpinning the current policies for containing the Eurozone crisis. But investors showed more willingness to look further afield, with non-US High Yield Bond Funds having their best week since mid-March while Global Bond Funds and Emerging Markets Bond Funds posted solid inflows. Europe Bond Funds extended their current outflow streak to four straight weeks as investors fretted over the fraying regional consensus in support of greater fiscal discipline. Dedicated Germany Bond Funds did take in fresh money for a sixth straight week but UK Bond Funds saw a five week inflow streak snapped. Flows into US Bond Funds, which hit a 23 week high, were broadly based. "In flows as a percentage of assets under management terms it was a good week for Short and Intermediate Term Government Funds," noted EPFR Global Research Director Cameron Brandt. "But in pure dollar terms it was the higher yielding asset classes -- municipal debt, junk bonds, mortgage backed securities -- that attracted the biggest flows." Emerging Market Bond Funds took in fresh money for the 16th time in the 18 weeks YTD with flows heavily skewed in favor of Hard Currency Funds. The asset class is benefiting from the attention of institutional investors, among them Norway's sovereign wealth fund, looking to rotate out of European sovereign debt. |
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| 7. Volume of retail trade up by 0.3% in euro area |
| Eurostat |
| May 7, 2012 In March 2012 compared with February 2012, the volume of retail trade rose by 0.3% in the euro area (EA17) and by 0.7% in the EU27. In February retail trade fell by 0.2% and 0.5% respectively. In March 20124, compared with March 2011, the retail sales index dropped by 0.2% in the euro area, but grew by 1.0% in the EU27. Monthly comparison In March 2012, compared with February 2012, Food, drinks and tobacco remained stable in both the euro area and the EU27. The non food sector increased by 0.1% and 0.6% respectively. Among the Member States for which data are available, total retail trade rose in ten, fell in nine and remained stable in Ireland and Sweden. The highest increases were observed in Bulgaria (+3.9%), Poland (+2.6%), Austria and the United Kingdom (both +1.9%), and the largest decreases in Portugal (-2.2%), Estonia (-2.0%) and Slovenia (-1.4%). Annual comparison In March 2012, compared with March 2011, "Food, drinks and tobacco" fell by 0.3% in the euro area and remained stable in the EU27. The non food sector rose by 0.3% and 2.2% respectively. Among the Member States for which data are available, total retail trade rose in fifteen and fell in six. The highest increases were observed in Latvia (+10.0%), Estonia (+9.3%) and Luxembourg (+7.2%), and the largest decreases in Portugal (-5.0%), Spain (-3.9%) and Malta (-2.7%). |
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| 8. The global growth outlook has deteriorated |
| TEB |
| May 7, 2012 The global growth outlook has deteriorated and central banks around the world have reacted to the worsening prospects. Broadly speaking, we continue to forecast lower and steeper interest-rate curves in emerging markets. The market's focus will be on the slew of Chinese data releases next week. After strong readings last month, new loans and export data will be watched closely for signs of improvement. We think CPI will be important in determining how much policy scope the authorities have. In Asia, we see a potential rebound in USDCNY and we are long 12x24m USDCNY NDF. In the rates space, we like steepeners in MYR and SGD rates. In CEEMEA, we recommend receiving ILS 1y1y and see steeper 2s5s ZAR IRS. After the Royal Bank of Australia's surprising rate cut, we also recommend selling AUDZAR. In Latam, yields are testing new lows. Brazil is in the vanguard and Colombian rates are lagging. We believe the normalisation of Brazilian real rates is not over and remain receivers of both 2y and 5y inflation swaps. We have opened a long TES B 2024. We believe it has the potential to breach 6.00% medium term. On the FX side, we have resumed our short USDCOP position after the Banrep's decision to extend the daily minimum USD 20mn purchase to 2 November. We had feared bolder action. |
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| 9. Armenian elections a further step in democratic direction |
| bne |
| May 6, 2012 Armenia's parliamentary election campaign ended with a bang May 4, when gas-filled balloons exploded at the ruling Republican Party of Armenia's final rally in Yerevan, injuring 114 supporters. The incident, two days before Armenians go to vote in the May 6 parliamentary elections, was a dramatic ending to what has been the country's most open and vibrant campaign to date. Armenians are due to vote in the first nationwide poll since the deadly violence that followed the contested 2008 presidential election. The conduct of the election is seen as a test for President Serzh Sarksyan's commitment to bringing Armenia closer to democracy, while the outcome of the vote may result in a substantial change to the balance of power within the parliament. Polls show tha Sarksyan's Republican Party of Armenia (RPA) is likely to lose its parliamentary majority, although together with its coalition partner Prosperous Armenia it is set to take over two-thirds of the vote, so the current coalition could be maintained. However, there are growing questions over the future relationship between the two parties. Click to read more |
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| 10. COMMENT: The make-up of the new Russian government |
| Ivan Tchakarov of Renaissance Capital |
| May 7, 2012 The inauguration of the incoming president will be held on May 7, which is a public holiday, and the following day, May 8, will be the president's formal nomination of the new PM's candidacy to the Duma. Vladimir Putin has officially announced and reiterated his firm intention to nominate Dmitry Medvedev as the prime minister, so we do not expect a surprise there. The PM's nomination has to be approved by the Duma a majority (226 votes minimum) will be needed for the approval of the nomination, but with 238 votes held by United Russia, this will hardly be a hurdle. The new organisational structure of the government will likely be announced within two to three days of the formal appointment of Medvedev as PM. Ministerial appointments, according to Vedomosti, will happen in steps in the subsequent 2 weeks, so do not expect a one-shot type of event. That said, the key appointments are likely to follow shortly after Medvedev's appointment (again according to Vedomosti half the ministers would be announced within 2-3 days). All said and done, we will probably have full clarity on the composition of the new cabinet towards the end of May. From an equity investors point of view, most crucial ministries to watch are the Ministry of Finance, Ministry of Economic Development, Ministry of Energy. The appointment at the Ministry of Justice will be indicative as to the seriousness in any intention of the new government to tackle corruption and the rule of law. Click to read more |
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| 11. Democracy on the move in Georgia |
| bne |
| May 7, 2012 The Georgian government is moving the country's parliament over 200 kilometres from the capital Tbilisi. Officially, the new location is a bid to support development in the country's poor regions; critics charge the move is just the latest effort to stymie the types of protests that led to the Rose Revolution in 2003. On May 26, Georgian Independence Day, the Georgian parliament will have its first session in Kutaisi, a Soviet-era industrial town that has fallen into decay over the past two decades. As such, an airport and housing, to help members of parliament with the commute, are also under construction. Designed by the Spanish firm CMD Ingenieros one of Georgian President Mikheil Saakashvili's go-to architects the new parliament is a futuristic globe of glass, complete with a moat and spacious gardens. The new building is a far cry from the Lavrenty Beria-designed parliament in Tbilisi, which still sports Communist-era etchings and is rumoured to hide a secret tunnel that Beria used to travel to and from his home. The new location, according to Saakashvili, is a "historic" move for the country, and its people that underscores the government's efforts to decentralise and reform. Click to read more |
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| 12. Executed student leaders remembered in Turkey |
| Hurriyet Daily News |
| May 7, 2012 Leaders of the 1968 student movements who were executed by the military junta in 1972 were commemorated yesterday on the 40th anniversary of their execution. The ceremony began in the morning at the graveyard where Deniz Gezmis, Yusuf Aslan and Huseyin Inan are buried. Kemal Kilicdaroglu, leader of the main opposition Republican People's Party (CHP) was among the participants of the ceremony. Click to read more |
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| 13. Missing Turk scribes to be freed soon, says NGO |
| Hurriyet Daily News |
| May 7, 2012 As hope rises for two Turkish journalists held in Damascus by Syrian authorities according to their relatives, a nongovernmental organization representative said the reporters were safe and sound and senior Iranian officials have been mediating for their release. Turkish journalists Hamit CoSkun and Adem Ozkose, who have been missing for nearly two months in Syria were found in Damascus by officials from the Istanbul-based Humanitarian Aid Foundation (IHH) on May 5, Serkan Nergis, press consultant for the IHH, told the Hurriyet Daily News yesterday. Click to read more |
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| 14. Prosecutors go on trial over Lighthouse probe in Turkey |
| Hurriyet Daily News |
| May 7, 2012 The three prosecutors removed from the high-profile probe into the Deniz Feneri (Lighthouse) charity last year went on trial on May 4 in a lawsuit that has fuelled accusations the government is seeking to cover up the alleged embezzlement at the charity. The trial kicked off at the Appeals Court, amid speedy judicial procedures which have overtaken the pace of the investigation against the suspects, who have yet to appear before the court. Click to read more |
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| 15. Rights, freedoms first topic for charter writing in Turkey |
| Hurriyet Daily News |
| May 7, 2012 The "rights and freedoms" chapter of the constitution will be the first issue on the agenda of Parliament's constitution making commission when it begins to write the draft of the new charter on Wednesday, the Hurriyet Daily News has learned. The decision was made during a preparatory meeting of the cross-party Constitution Conciliation Commission last week with the assumption that the "rights and freedoms" topic would be the least contentious. When discussing the new text, the existing constitution will not serve as a reference. Click to read more |
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| 16. Turkish government scales down national day festivities |
| Hurriyet Daily News |
| May 7, 2012 The government has significantly overhauled and scaled down official ceremonies on national holidays and commemoration days, removing the controversial reenactment demonstrations of Turkish victories over hostile forces and further curbing the profile of the military. Under a regulation issued by the Cabinet and published in the Official Gazette over the weekend, only the Republic Day of Oct. 29 will be celebrated as a state event, under the patronage of the President, who will lead the ceremony at Atatrk's mausoleum and host a reception in the evening at ankaya Palace. The new regulation also confirmed the President's takeover of the Victory Day celebrations on Aug. 30 from the chief of general staff, who had up to now always received the greetings and hosted the reception at military facilities. Victory Day will be the only national holiday to retain a military parade. However, the highest administrative official will lead provincial ceremonies, accompanied by the local commander and the mayor. Click to read more |
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| 17. Will Tekin run for Turkey's opposition leadership? |
| Hurriyet Daily News |
| May 7, 2012 As the convention approaches, activity in the main opposition Republican People's Party (CHP) has increased. Deputy Head of CHP Gursel Tekin has resigned. The fight over the provincial presidency of Istanbul was the final straw and Tekin has gone. Many are curious whether Tekin will leave CHP or form a new party. In the deep corridors of CHP there's talk of surprising future plans, interesting alliance expectations and searches for change. There are many eccentric scenarios; there are also realistic ones. But, I can share this observation of mine: Tekin will not retreat and will not rest after his resignation. Click to read more |
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| 18. Code lets foreigners buy more local land in Turkey |
| Hurriyet Daily News |
| May 7, 2012 Turkey's Parliament has approved a law that eases restrictions on the sale of land and real estate to foreign citizens and firms despite harsh objections from opposition parties. The bill, approved late May 3, most notably removes the condition of reciprocity and increases the total amount of real property that a foreigner can own from 25,000 square meters to 300,000 square meters in all of Turkey. Click to read more |
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| 19. Turkish monetary policy focused on defending local currency |
| Erste |
| May 4, 201 The yield curve is inversely sloped right now in Turkey, as the CBT intentionally creates volatility on the short end of the curve to smooth out the volatility in exchange rates. Thus, the short end seems somewhat undervalued. With the expectation of inflation declining only slowly over the medium term, medium- to long-term maturities may be somewhat overvalued and are likely to remain so, as the CBT seems committed to pursuing a monetary policy based on defending the currency. |
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| 20. The total number of airport passengers grew 11% yoy in April 2012 in Turkey |
| Erste |
| May 7, 2012 The State Airport Authority (DHMI) released air traffic data regarding all airports in Turkey for April 2012. The total number of passengers grew 11% y/y in April 2012, with passengers in domestic lines up 14% y/y and international lines up 7% y/y. We observe a slowdown in international passenger growth in April 2012 in airports other than Istanbul Ataturk. In particular, a 17% y/y decline in Antalya Airport's international arrivals/departures negatively impacted the consolidated figures. With the addition of the April 2012 figures, total passenger growth in the first four months of 2012 was realized at 12%, in line with our full-year growth assumption of at least 10%. Air traffic movement (ATM) growth of 5% lagged behind passenger growth of 11% (which is an early indicator of better load factors) in April 2012. YTD, the ATM growth of 7% is also lower than the passenger growth of 12%. Passenger traffic at Istanbul Ataturk Airport (operated by Tav Airports Holding and the main hub for Turkish Airlines) recorded 21% y/y growth in April 2012, while passengers in international lines were up 25% y/y in the same month. The April figures signaled that the strong momentum in Istanbul Ataturk prevails. All in all, we welcome the April 2012 traffic results, which confirm our positive stance on Turkish aviation stocks. |
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| 21. Turkish automotive sector: 19% yoy drop in domestic LV sales in April |
| Erste |
| May 7, 2012 According to the Automotive Distributors' Association (ADA), Turkey's domestic light vehicle sales (passenger car and light commercial vehicle sales) declined 18.8% y/y to 62.9k in April 2012, in line with our expectation of 63k. Passenger car (PC) sales were down 15.2% y/y to 45.6k, while light commercial vehicle (LCV) sales declined 27% y/y to 17.3k units in April. Thus, domestic light vehicle demand contracted 23% y/y to 199k in the first four months of the year, mainly stemming from weak sales of light commercial vehicles in the period. The contraction in the market was due primarily to a high base effect, as well as the effect of increasing vehicle prices at the beginning of this year, especially in the commercial vehicle segment. Automotive companies have reflected the tax hike (of October 2011) in vehicle prices after the completion of year-end campaigns. We maintain our 14% contraction expectation for the domestic automotive market in 2012, given our better market expectation for 2H. Tofas and Ford Otosan lost market share, while Dogus Otomotiv achieved a record share in April. When compared to the last 12 months' cumulative market shares, Tofas and Ford Otosan lost market shares (1.1pp and 2.8pp, respectively) in the light vehicle market (mainly due to the greater contraction in commercial vehicle sales), while Dogus Otomotiv gained market share (4.4pp) in April 2012. Dogus Otomotiv achieved the highest market share in the past three years in April. Based on the April figures, Dogus Otomotiv is the leader in the light vehicle market, with a 17.3% share, followed by Tofas (13.6%), Renault (13.3%) and Ford Otosan (12.2%). |
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| 22. Turkey's coasts await foreign buyers |
| Hurriyet Daily News |
| May 7, 2012 With the approval of new legislation last week regulating the sale of Turkish land to foreigners, tourism centers like Alanya, Didim, Fethiye and Kusadasi have received more attention from prospective buyers, leading experts to predict a rise in property and housing prices as the demand increases. The new law will pave the way for foreign citizens from the Middle East, Gulf countries, the United States and the Far East to purchase real estate in Turkey, according to Anatolia and Dogan news agencies. Click to read more |
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| 23. Failure in official negotiator process, says Turkish Airlines |
| Erste |
| May 7, 2012 Hava-IS, the union representing certain Turkish Airlines employees, announced that the official negotiator process failed. It was indicated that the union is currently awaiting the official negotiator report and following the sixth day they after receive the report, they will announce their strike decision. Although we attach a low probability to the exercise of a strike decision, on the back of our belief that the government is likely to intervene in the process with national security arguments, the news may negatively impact the share performance. |
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| 24. Turkish Bizim Toptan to distribute gross cash dividend of TRY 0.3538 per share |
| Erste |
| May 7, 2012 Bizim Toptan's BoD decided to propose a gross cash dividend payment of TRY 0.3538 per share (net: TRY 0.3007) to the General Assembly, which will be held on May 29, 2012. The payment date will be decided at the General Assembly. The proposed dividend corresponds to a dividend yield of 1.4% per share, according to the latest closing price. Total cash outflow from the company will be TRY 14.2mn, for a 47% payout ratio from 2011 net earnings, in line with our 50% payout expectation. Bizim Toptan's net cash position stood at TRY 9.4mn as of end-2011. |
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| 25. Turkish TAV Airports Holding 1Q12 net profit beats estimates |
| Erste |
| May 7, 2012 TAV Airports Holding posted EUR 12mn net profit in its 1Q12 financials, significantly better than our estimate of EUR 4mn net loss and the market consensus of a EUR 4mn net loss. Adjusted revenue reached EUR 211mn, vs. our estimate of EUR 201mn and the consensus of EUR 205mn. Adjusted EBITDA at EUR 47mn translates into a 22% EBITDA margin, slightly better than the market expectation of 21% and our 18% estimate. In nominal terms, EUR 47mn EBITDA falls ahead of our estimate of EUR 36mn and the market consensus of EUR 44mn. Below the EBIT line, the company recorded EUR 15mn net financial expense. The significant deviation on the bottom line is mainly due to the substantial decline in the company's tax expense. The company, which recorded a EUR 5mn tax expense in the same period of last year, posted EUR 1mn tax income this quarter. TAV's consolidated net debt of EUR 792mn as of end-2011 surged to EUR 907mn as of end-March 2012, due mainly to seasonality. The strong traffic figures translate into better operational performance, strengthened by deferred tax booking. The results confirm our conservative stance. We consider the company's 1Q12 as a supporting factor for the share performance. We maintain our Buy call with a 12M target share price of TRY 10.6, but an upward revision to our target price is likely. |
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| 26. Turkish EMLAK KONUT REIT 1Q12 earnings expectations surpassed |
| Erste |
| May 7, 2012 Emlak Konut REIT reported TRY 39.2mn net profit for 1Q12, significantly higher than our TRY 10.4mn expectation and the consensus estimate of TRY 12.7mn. The deviation between our estimate and the announced net profit mainly stemmed from a TRY 33mn one-off tax reversal this quarter. The company took back TRY 33mn from the tax office in return for withholding tax on interest income paid between 2007 and 2011. The company recorded TRY 25.7mn net revenues, vs. our expectation of TRY 61.6mn (consensus: TRY 54.4mn) in its 1Q12 IFRS financials, due to the absence of RSM project revenues (no delivery from RSM projects) this quarter, contrary to our expectations. Revenues from revenue sharing model (RSM) projects were TRY 81mn in 1Q11. Emlak Konut REIT reported TRY 7mn revenue from the sale of land plots and TRY 18.6mn revenue from the delivery of residential and commercial units in 1Q12. The gross margin declined 6.6pp to 38.4% in 1Q12, mainly due to the lack of delivery from high margin RSM projects. The company recorded negative EBITDA of TRY 3.5mn for this quarter (our expectation: positive EBITDA of TRY 2.6mn, consensus: positive EBITDA of TRY 5.2mn). We believe that the IFRS income statement does not reflect the company's current performance, as it is unable to record revenues from sales of units on the P&L until units are delivered. Thus, apart from IFRS financials, the company sold a total of 2,039 residential units (worth TRY 556mn) in 1Q12. The company aims to generate at least TRY 3bn revenue from 10k pre- sold units in 2012. Other than revenues, OPEX and financial income & expenses in 1Q12 are in line with our expectations. The share price outperformed the ISE100 by 1% on Friday and 5.8% over the past three months. We maintain our target price of TRY 2.9 and our Buy call. |
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