Turkish banks on investors' radar: The reason is inflation!

Bank of America Analyst David Taranto, in his analysis regarding Turkish banks, pointed out that investor interest has increased recently.

According to a report on Bloomberg HT, the report stated: "The intensity of recent interactions is reminiscent of the pre-2013 period, when there were expectations of single-digit interest rates and credit rating upgrades. This time, low positioning, inflation, the outlook for normalization in interest rates, and the real returns of banks are among the reasons for the interest."

Unlike previous years, it was noted that long-term investment funds are now dominant in market entries, and the report added: "The consensus is that banks will best keep pace with Turkey's normalization theme. In almost every meeting, questions regarding inflation expectations, the currency outlook, and the sustainability of orthodox policies are on the table."

The report stated that regulations have stopped the stock market from being a playground for hedge funds, noting: "The short-selling ban and high offshore TL funding costs are preventing hedge funds from trading."

Regarding expectations for growth and fundamental concerns, the report assessed: "Investors with a bullish view believe that, similar to the early 2000s, we are at the beginning of a credit rating upgrade cycle. On the other hand, valuations remain a concern for investors expecting a decline."

Stating that banks have long been trading with a focus on the next quarterly period, the analyst noted: "The fundamental change for us in the current cycle is that questions have shifted toward the medium-term outlook. We expect the fundamental story of banks to accelerate after the first quarter, following the peak in interest rates."

The report indicated that there is a rapid recovery in CDS and bond markets and that stocks will follow, issuing a 'Buy' recommendation for Akbank, Garanti, İş Bankası, and Yapı Kredi shares.

News Source: 12punto