JPMorgan visits 20 Turkish banks: Emphasis on corporate weakness...

JPMorgan analysts met with 20 banks and companies in Turkey. In a note prepared following the visit, emphasis was placed on corporate weakness in Turkey. The note stated that Turkey's macro momentum is balanced by corporate weakness. The note also included recommendations for banks and companies.

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JPMorgan visits 20 Turkish banks: Emphasis on corporate weakness...

JPMorgan corporate research analysts, including Zafar Nazim and Lorenzo Parisi, along with economist Fatih Akçelik, met with 20 banks and companies in Turkey. The note prepared after the meetings pointed out that the momentum on the macro side is balanced by corporate weakness and corporate valuations that are close to their fair value.

According to BloombergHT, the note published by JPMorgan following the meetings with officials stated that while Turkey has achieved a strong performance in borrowing over the past year following the return to orthodox policies and the resolution of macro imbalances, this has not improved the fundamentals of the companies.

'DOLLARIZATION COULD BE TRIGGERED'

While it was emphasized that many Turkish companies are pressured by the real valuation of the Turkish Lira and weak domestic demand affected by purchasing power declining due to high inflationary pressures, it was also highlighted that corporate debt fundamentals remain at a healthy level.

While momentum on the macro side is expected to continue in the short term, it was also stated that the issue of dollarization will continue to be monitored. Noting the trend of domestic residents in Turkey shifting from foreign currency deposits and KKM (FX-protected deposits) to TL deposits, JPMorgan analysts also warned that if the current TL policy continues for a long time, it could trigger dollarization at some point.

'MARKET TECHNICALS ARE DETERIORATING'

While JPMorgan made detailed assessments regarding the fundamentals of many companies, recommendations regarding the companies' Eurobonds were also updated.

The assessment emphasized that issuance pressure from the corporate finance side is expected to decrease, but market technicals are deteriorating.

Reminding that companies in Turkey made a record level of Eurobond issuances of 19.6 billion dollars in the last 12 months, JPMorgan analysts pointed out that as a result, investor positioning has shifted from neutral or overweight to underweight.

JPMorgan analysts also shared the following recommendations regarding Eurobonds: