In its report titled ‘Turkish banks back on the radar’, Bank of America stated that investor interest in Turkish banks has increased after years.
In his analysis of Turkish banks, Bank of America Analyst David Taranto pointed out that investor interest has increased recently.
“The intensity of recent interactions is reminiscent of the pre-2013 period of single-digit interest rates and the expectation of a credit rating increase. This time, low level positioning, inflation, normalization outlook in interest rates and real returns of banks are among the reasons for the interest.”
It is stated that unlike previous years, this time long-term investing funds dominate the inflows to the stock exchange and “The common view is that banks will best keep up with Turkey’s normalization theme. In almost every meeting, questions about inflation expectations, exchange rate outlook and the sustainability of orthodox policies are on the table.”
“The short selling ban and high offshore TL funding costs prevent hedge funds from trading,” the report said, noting that regulations have made the stock market a playground for hedge funds.
Regarding bullish expectations and fundamental concerns, “Bullish investors think that the credit rating is at the beginning of an increase like in the early 2000s. On the other hand, valuations remain a problem for bearish investors.”
Stating that banks have been trading focused on the next quarter for a long time, the analyst said, “The fundamental change for us in the current cycle is that the questions have shifted to the medium-term outlook. After interest rates peaked, we expect the fundamental story of banks to accelerate after the first quarter.”
In the report, it was stated that there is a rapid recovery in the CDS and bond markets, and that stocks will follow, and a ‘Buy’ recommendation was given for Akbank, Garanti, İşbank and Yapı Kredi shares.