Improved growth, falling rates seen lifting Turkey stocks
January 27 2020 11:46 PM
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Employees work in their booths at the Borsa Istanbul stock exchange in Istanbul (file). The rally in Turkish equities that has carried the benchmark index to record highs this year was largely driven by gains in shares in small and medium-cap companies that started in the second half of 2019.

Bloomberg/Istanbul

The sometimes strained relationship between Ankara and Washington may be enjoying a period of calm, giving Istanbul stocks “a window of opportunity” to gain in 2020, said one of Turkey’s best-performing equity fund managers.
A steady stream of negative headlines testing the alliance has stopped since Iran-US tensions threatened to escalate into conflict. It seems that the crisis has been good in reducing relative risks attached to Turkey’s market, said Haydar Acun, the managing partner at Marmara Capital in Istanbul.
A series of clashes with the US in recent years culminated in the fallout from Turkey’s decision to purchase a Russian missile defence system that started arriving in July. Even so, a cordial personal relationship between presidents Donald Trump and Recep Tayyip Erdogan has survived the disputes. And while plans for parts of a battery of US sanctions against Turkey have progressed, the punitive measures have yet to be imposed.
“I do not expect things to get significantly worse from here as far as US-Turkey relations are concerned for about nine months to a year, until the US Presidential elections, and that’s likely to help Turkish equities’ risk premiums drop,” Acun said in an interview.
Acun’s Marmara Capital Asset Management Equity Fund returned 75% in 2019 compared with a gain of 25% for the benchmark BIST 100 Index. That performance was pipped only by Is Investment’s index-tracking technology stocks fund, according to the Turkey Electronic Fund Platform.
Investors poured $11.2mn into the two largest exchange-traded funds that focused on Turkish equities last week. The benchmark index was 0.8% lower yesterday, joining a global sell-off as concerns about the deadly coronavirus outbreak increased risk aversion.
Acun expects improved economic growth and falling interest rates to also support local equities this year. “As long as there’s not another major geopolitical crisis, we don’t see an imminent threat that can weigh on Turkish markets.”
The rally in Turkish equities that has carried the benchmark index to record highs this year was largely driven by gains in shares in small and medium-cap companies that started in the second half of 2019. While these segments have been a favourite allocation for Acun, he is moving in 2020 into shares of larger-capitalized, core industrial companies that he said have been laggards. As a result, he has added Anadolu Efes, Coca Cola Icecek, Borusan and Petkim to the fund.
Acun sees banks rallying fast should there be a thorough plan to tackle non-performing loans. About 20% of his investments are in lenders.
In this sector, he has positions in Akbank, Halkbank and Yapi Kredi. Acun said he may increase his position in Yapi Kredi as he sees Unicredit’s stake sale in the company as a positive in resolving problems related to management.
Foreign investor perception of Turkey risks might remain bad. But he doesn’t expect further outflows. “Those who didn’t want to take the risk left anyway,” he said.



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