Is Investment - Daily Market Watch 24.01.2011

8/7/2019 Is Investment - Daily Market Watch 24.01.2011

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• Waiting to be wiser

Market Commentary

Please refer to important disclaimer at the end of this report.

Wall Street took a breather on Friday despite better than expected economicreadings and strong Q4 results in the US. There are expectations that yieldsin the US could rise a bit more with stronger than expected global recovery.Asian markets are mixed today, though with limited gains and losses, withmixed views on earnings outlook.

With the lack of any major news flow today, we expect a flat market inTurkey. The markets will be eyeing tomorrow’s inflation report, and theannouncement for a possible increase in reserve requirement rates. In thebond market morning quotations stand flat at 7.67% and the currency isslightly stronger at 1.5660.

Headlines & Macroeconomic News

Calendar

Corporate News & Trading Ideas

Akbank to issue corporate bonds with 6 months maturity.

Isik Sigorta’s sale might be on the table soon.

DOAS targets to sell VW brand 45K passenger cars in

2011

Daily Market Watch

24 January 2011

MSCI Emerging Market Indices, in US$ terms

MSCI Sector Indices Best/Worst Performers

Best 5 Daily Worst 5 Daily

Tel. Svc. 0.5% Softw r&Srvcs -1.6%

Utility 0.0% Consumer Discr -1.5%

Public serv. 0.0% Semiconductors -1.4%

Real Estate -0.1% Inf. Tech. -1.4%

Hlth Care -0.2% Tech Hard&Eqp -1.3%

ISE-100 Best / Worst Performers

Best 5 Daily Worst 5 Daily

BJKAS 8% PEGYO -7%

METRO 6% NETAS -4%

HURGZ 5% KRDMD -3%

PRKME 5% AEFES -3%

IHLAS 5% TCELL -3%

ISE-100 Top 5 by Trading Volume

Ticker Close Daily Vol. (TRY mn)

GARAN 7.56 1.89% 426

ISCTR 5.18 2.37% 312YKBNK 4.75 3.04% 182

VAKBN 3.92 2.62% 177

AKBNK 8.06 2.54% 137

85

90

95

100

105

110

115

2 0 / 1

2 / 2 0 1 0

2 7 / 1

2 / 2 0 1 0

0 3 / 0

1 / 2 0 1 1

1 0 / 0

1 / 2 0 1 1

1 7 / 0

1 / 2 0 1 1

MSCI EM Turkey MSCI EM

AKBNK TI:

ASYAB TI:

DOAS TI:

Market Figures Close Daily 1M

ISE-100, TRY 65,927 1.0% 1.7%

Trading Vol., TRM mn 3,519 -6% 33.3%

MSCI EM Free 1137 -0.6% 1.1%

TRLIBOR, 3M% 7.01 16.3 bps -24.4 bps

Benchmark Bond 7.69 13.0 bps 29.0 bps

Eurobond -2030 5.80 0.0 bps 19.5 bps

US$/TRY 1.5769 1.03% 1.3%

EUR/TRY 2.1343 1.43% 1.4%

ISE 2010E P/E 12.17

ISE 2011E P/E 10.97

Local Calendar

24/01/2011 Capacity Utilisation Rate and Real Sector Confidence Index-

January (Market median call : 76%)

Global Calendar Exp. Pri.

24/01/2011 BZ:Trade Balance (FOB) - Weekly $496M

BZ:Trade Balance (FOB) - Weekly

JN:Supermarket Sales (YoY) % -0.50

FR:PMI Manufacturing 56.6 57.2

FR:PMI Services 55.2 54.9

GE:PMI Manufacturing 60.5 60.9

GE:PMI Services 59 58.3

EC:PMI Composite 55.5 EC:PMI Manufacturing 57.1 57.1

EC:PMI Services 54.1 54.2

BZ:FGV CPI IPC-S % 1.06

EC:Industrial New Orders SA (MoM) % 2.40 1.40



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Headlines & Macroeconomic News

Waiting to be wiser Central Bank (CBRT) proved its dedication to its new policy coctail of “low rate-higher reserve requirement (RR)” inThursday’s Monetary Policy Meeting (MPC) by delivering one more rate cut. Although market (including us) was expectingthe RR decision to be announced in today’s Official Gazette (like the previous month), this has not been the case.

The lag between two decisions creates an uncertainity over the market and raises question marks over the minds. Is thistiming a deliberate choice or a coincidence?

To be honest, we find it hard to come up with a credible explanation. We can perhaps create synthetic explanations, whichshould be taken with a pinch of salt.

**One can argue that CBRT’s choice was deliberate as the Bank wants to see some market flavour before the RR decision.Accordingly, the Bank might have wanted to track two data the impact of1-the recent rate cut and RRR hike on the credit channells (the decision was effective on January 7th but takesapproximately two weeks to see the actual impact)2-the almost unexpected rate cut of January over the market sentiment and banking sector’s expectations, which will be in aninput for deciding the size of the RR decision

Although it is easy to see the point in the aforementioned explanation, one can easily challenge it by asking “is it worthed theuncertainity?”. We doubt it.

**Another possible explanation is to harmonize the announcement of RR move with the Inflation Report due january 25th(Tuesday). There is an unofficial expectation in the market based on a news piece by Reuters, stating that decision will betaken on 24th (and most probably be announced by the Official Gazette on 25th). If CBRT is planning to take an unorthodoxstep requiring a deep explanation (ie: Inflation Report), then awaiting Inflation Report might make sense.

**On another front, the delay might be associated with lack of consensus among the MPC members. Then again, we attributeonly little possibility to this, as these decisions are not the result of last minute work.

Please note that we expect the spread between RRR of different maturities to expand significantly with the new decision.This time the decision might cover fx liabilities in addition to TL liabilities.



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Corporate News & Trading Ideas

Akbank to issue corporate bonds with 6 months maturity. Akbank’sBoD has authorized the Headquarters to issue TL denominated corporatebonds in the domestic market with a total principal amount of TL 500mnwith 6 months maturity. The bond will provide 60bps spread to thereference T-bills. For guidance, total interest on the bond will be in 6.85%-6.95% range.

Isik Sigorta’s sale might be on the cards soon. Speaking to dailyZaman, Bank Asya’s CEO hinted that the divestiture of Isik Sigorta is onthe way, and we would likely to see some concrete steps in 4 months. Isikhas approximately 1% share in the P&C insurance market. Bank Asyabranches have 22% share in the insurer’s distribution network.

According to news report on daily Hurriyet quoting Mr. Vedat Uygun, Dogus

Otomotiv-Volkswagen Passenger Car General Manager, the company

aims to sell minimum 45K VW brand passenger cars (PC) in 2011, with a

target market share of 10%. Dogus Otomotiv forecasts domestic PC

market to be minimum 450K units in 2011, down from 510K units in 2010. It

is stated in the report that the forecasts are quite conservative and they are

the minimum levels. The company targets to sell VW brand 50K PCs in

2012, with a target market share of 12%.

Akbank

AKBNK TI UP 15% Upside(TRY) Current Target

Price 8.06 9.25

Mcap, mn 32,240 37,000

FF Mcap, mn 9,672 11,100

(x) 2010E 2011E

P/E 10.50 10.82

P/BV 1.81 1.63

P/Deposit 0.49 0.41

(TRY) 1M YtD

Avg. Vol. Mn 47.2 53.1

Relative Perf. -4.1 -6.0

ASYAB TI OP 32% Upside

(TRY) Current Target

Price 2.80 3.70

Mcap, mn 2,520 3,330

FF Mcap, mn 1,260 1,665

(x) 2010E 2011E

P/E 9.73 7.48P/BV 1.28 1.11

P/Deposit

(TRY) 1M YtD

Avg. Vol. Mn 37.5 42.7


DOAS TI OP 44% Upside

(TRY) Current Target

Price 6.16 8.90

Mcap, mn 1,355 1,958

FF Mcap, mn 352 509

(x) 2010E 2011E

P/E 7.50 7.76

P/BV 1.71 1.44

EV/EBITDA 7.51 7.83

(TRY) 1M YtD

Avg. Vol. Mn 3.5 4.0


Asya Katilim Bank [email protected]

Dogus Otomotiv [email protected]

[email protected]

[email protected]

[email protected]



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0.0

0.5

1.0

1.5 Mil TLDaily Volume

FRN Coupon Zero Bill

0 2-5yrs

04/12*

5.0

6.0

7.0

8.0

9.0 % TL Yield Curve

Bill Coupon Zero

2 73 yr 4 yr 5 yr

Benchmark Volume: 206.7mil TL

F/X Data

As of 21/01/2011 Close Daily YTD

US Dollar 1.5729 0.49 -1.84

Euro 2.1366 -0.38 -3.49

Euro/US Dollar 1.3584 0.88 -4.06

Equal Weighted Basket 1.8548 -0.01 0.45Source: Bloomberg

Change (%)

TRY

CZK

HUF

KZT

PLN

RON

RUBUAH

ZAR

CNY

INRARPBRL

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0% Daily Performance Against US Dollar(%)

Currency

• Despite an improved mood in European markets reversing earlierpessimism on the back of above expectations German IFO figures, onconcerns regarding inflationary pressures and that interest rates willrise, EM stocks observed a mixed trend. EUR/USD was on the riseduring the day, testing the 1.3600 levels and closing the day around1.3596. On the day, the USD was weaker both against the EUR andEM currencies, Eastern European EM currencies led by the HUF(+1.1% against the equally weighted basket) were the day’soutperformers while the ZAR (-0.2%) underperformed its EM peers oninflationary concerns due to hikes in commodity prices and a possibilityof an increase in interest rates.

• Despite a negative opening following MPC’s rate cut decision, whereTRY/USD was over 1.58 and the basket touched the 1.86 levels, TRYreversed its earlier losses later in the day before US markets openedand ended the day outperforming the EM average ( +0.13% basketperformance vs EM average). TRY was up 0.05% on a basket basis, up0.5% against the USD and down 0.4% against the EUR.

• In terms of data releases, on the local front, we have the CapacityUtilization Rate and Real Sector Confidence Index for January. On theEuropean front, we have the EC PMI and the Industrial New Orders

data releases. On the Americas front, we have the Brazilian IndustrialNew Orders SA and CPI FGV CPI.

Local Bills and Bond

• The local rate market had a volatile day on Friday and witnessed sell-offs following Thursday’s rate cut announcement and on the back of thelack of clarity regarding adjustments in reserve requirements. The TLbasket went up sharply reaching the 1.86 levels intraday and thebenchmark traded in the 7.80%-8.00% (7.57%-7.76% comp.) range,ending the day 17 bps up at 7.90% simple (7.67% comp). The long endcontinued to witness sell-offs with the 15/01/20 note ending the day 19bps up at 9.51%. The sell-off pressure was also noticeable at the short-end end in CPI linkers although volumes were low except in the 29/4/15note.

• Tomorrow’s inflation report will be most likely give more clarity to themarkets. We expect a relatively quite day in local rates today ahead ofthe report. Early quotations in the benchmark stand at 7.66% comp.

Corporates• Garanti Bank’s 1 year maturity TL denominated bank bond will be

settled on January 31rst, 2011 and will mature in January 26th, 2012.The notes were priced at 1-yr Treasury+75 bps (7.68%). Total issuancewill be TL 1 bn. Offers will be taken between January 24th-28th.

Eurobonds• On the back mixed data release and newsflow, there was a sell-off

pressure in EM eurobond markets on Friday. The better thananticipated German IFO, which pointed out to an improvement inbusiness sentiment and positive financial data release of US companiesgave a temporary relief to the markets and some of the earlier losseswere reversed, however EM eurobonds ended the day with marginallosses. German bunds backed up considerably on the day ending theday at 3.176% wile the US 10-yr Treasuries rallied slightly, ending theday at 3.406% and EM sovereign spreads widened marginally.

• Turkish eurobonds continued to witness sell-offs on the back of the on-going negative mood in global markets. Following German IFO releasesome of the earlier losses were reversed although the belly postedlarger losses compared to the rest. The yield on Turkey’s benchmarkEurobond 2030 ended the day 1 bp up at 5.81% while Turkey’s 5-yrCDS continue to trade flat at 145/149 levels.

RecommendationsLocal Rates:• 15-01-20 Fixed Coupon Note: We continue to like the longer end of the

curve given the carry.

• Deposits versus short notes: We do not see any value in the short endof the curve and thus recommend investors to prefer deposits instead at

levels around 8.00%-8.50%. We maintain our call for the CBRT to starthiking rates in May-2011.

Eurobonds:• 7.50% 14-Jul-17 USD (HOLD): We continue to like the issue given its

yield versus similar issues.



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This report has been prepared by “ Yatırım Menkul Deerler A..” ( Investment) solely for the information of clients of Investment.

Opinions and estimates contained in this material are not under the scope of investment advisory services. Investment advisory services are

given according to the investment advisory contract, signed between the intermediary institutions, portfolio management companies,

investment banks and the clients. Opinions and recommendations contained in this report reflect the personal views of the analysts who

supplied them. The investments discussed or recommended in this report may involve significant risk, may be illiquid and may not be suitable

for all investors. Investors must make their decisions based on their specific investment objectives and financial positions and with the

assistance of independent advisors, as they believe necessary.

The information presented in this report has been obtained from public institutions, such as Istanbul Stock Exchange (ISE), Capital Market

Board of Turkey (CMB), Republic of Turkey, Prime Ministry State Institute of Statistics (SIS), Central Bank of the Republic of Turkey (CBT);

various media institutions, and other sources believed to be reliable but no independent verification has been made, nor is its accuracy or

completeness guaranteed.

All information in these pages remains the property of Investment and as such may not be disseminated, copied, altered or changed in any

way, nor may this information be printed for distribution purposes or forwarded as electronic attachments without the prior written permission

of Investment. (www.isinvestment.com)

This research report can also be accessed by subscribers of Capital IQ, a division of Standard & Poor's.

For more information, please visit Capital IQ's web site at www.capitaliq.com.

Most Traded Local Bonds & Bills

T-Bills

TRB200711T14 20/07/11 6 m 12 m 4,292 46 107 96.987 6.30 6.40 31 31 5.93 7.44 6.84 0.47 0.002 0.44

TRB090311T13 09/03/11 6 m 6 m 2,011 0 0 99.284 5.60 5.74 11 7.42 7.42 6.63 0.12 0.001 0.11

Zero Coupon Bonds

TRT071112T14 07/11/12 22 m 22 m 7,778 1,141 5,361 87.617 7.90 7.67 17 36 7.04 7.69 7.32 1.72 0.059 1.46

TRT250412T11 25/04/12 15 m 21 m 14,781 207 1,117 91.301 7.61 7.54 11 32 6.70 7.89 7.39 1.21 0.040 1.06

TRT080812T26 08/08/12 19 m 21 m 13,412 206 1,605 89.217 7.85 7.69 13 32 6.88 7.88 7.45 1.48 0.049 1.28

Coupon Bearing Bonds

TRT150120T16 15/01/20 9 y 10 y 8,798 281 1,281 107.300 9.29 9.51 18 60 8.41 9.51 8.78 5.68 0.002 6.30

TRT100413T17 10/04/13 2.2 y 3 y 7,903 74 115 104.050 7.99 8.23 38 7.18 8.23 7.69 1.94 0.000 2.06

TRT170615T16 17/06/15 4.4 y 5 y 8,514 31 50 104.000 8.88 9.08 37 68 7.70 9.08 8.28 3.53 0.002 3.67

TermOrig.

TermHigh

(%)

Yld Chg

1D

(bp)

Wk

(bp)

Amt

Outstd.(Mil TL)

Instrument Matur ityDaily

Volume(Mil TL)

3 mo

Avg

(%)

Dur. CnvxPVBP

* 100

Weekly

Volume(Mil TL)

Last

Traded

Price

Simple

Yield

(%)

Comp

Yield

(%)

3 mo Range

Low

(%)

Is Investment - Daily Market Watch 24.01.2011

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