VAKIFBANK TURKISH ECONOMY WEEKLY Markets and Foreign Investor’s M k t dF i I t ’ Holding Ratios
T. Vakıflar Bankası T.A.O k fl k
18 July 2011
1
No: 37
Vakıfbank Economic Research
Benchmark bond rate continues to increase since the beginning of 2011... After policy rate cuts in December and January, purchase was seen in Turkey’s Bond Market and bechmark bond yield has decreased fastly. After policy rate was kept constant, benchmark bond rate started to increase. Moreover, gap between the benchmark bond rate and CBRT policy rate has increased sharply. sharply
Benchmark bond rate has increased since the beginning of 2011, 2011 because high current account deficit continues, increasing required reserve ratio caused concerns about banking profitability, risk appetite decreased in global markets and investors move away from risky assets. On the other hand in the last CBRT’s meeting policy rate was kept constant which was parallel to market consensus, and this caused a limited decrease in the benchmark bond rate. However, increasing concerns about developed countries, decreasing risk appetite and CBRT’s policy rate decision may support upward movement on benchmark bond rate. rate Vakıfbank Turkish Economy Weekly
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USD/TRY moves upwardly for the last three months... High current account deficit, high inflation rate and CBRT’s stable interest rate decision caused weakness in the TRY. TRY Moreover, measures taken to reduce the current account deficit were not effective as expected and this causes expectations for the new measures and preessures on TRY. Fragilities in Euro Zone increase the value of dollar against euro and decrease the global risk appetite. These resulted in decrease in the demand for TRY as a currency of the EM. CBRT decreased the daily amount of foreign exchange to be purchased in auctions from USD 50 million to USD 40 million by taking into account the recent increases in the USD/TRY.
Vakıfbank Turkish Economy Weekly
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IMKB 100 index in 2011... After CBRT CBRT’ss signal of cutting in interest rates in the last months of 2010, the decrease in benchmark interest rate to it’s lowest level in the history and the positive atmosphere in global economies led to an increase in IMKB‐100 index at the beginning of the 2011. However, in the first half of 2011 the 25 basis point cut in interest rate and the increase in required reserve ratio led to some concerns in banking sector. sector Hence, Hence increased sell‐off in banking shares led to decreases in IMKB banking index. As well as the sectoral decreases in index, index increasing oil prices with the effect of unrets in Middle East caused to concerns about inflation and current account deficit. Hence IMKB‐100 index moved downwardly during the eight i ht weeks k in i the th beginning b i i off 2011. 2011 After these decreases, in the first week of May 2011, index examined the 70.000 level and reached to 70.335 which was the highest level in 2011. However this increase turned downward again because of high current account deficit and the concerns about Greece. As a result index decreased by 11.8% and reached to 62.072. hand realization of trade deficit under the expectations and inflation rate above On the other hand, expectations affected the index limitedly. Hence index started to follow a horizontal course. Vakıfbank Turkish Economy Weekly
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Foreign equity ratio ratio decreased from 66.4% to 62.2% ... Foreign Equity Holding Ratios(%)
67 66 65 64 63 62 61 60
12.07.2011
07.07.2011
02.07.2011
27.06.2011
22.06.2011
17.06.2011
12.06.2011
07.06.2011
02.06.2011
28.05.2011
23.05.2011
18.05.2011
13.05.2011
08.05.2011
03.05.2011
28.04.2011
23.04.2011
18.04.2011
13.04.2011
08.04.2011
03.04.2011
29.03.2011
24.03.2011
19.03.2011
14.03.2011
09.03.2011
04.03.2011
27.02.2011
22.02.2011
17.02.2011
12.02.2011
07.02.2011
02.02.2011
28.01.2011
23.01.2011
18.01.2011
13.01.2011
08.01.2011
03.01.2011
59
Source: Central Registry Agency
Uncertainty about debt ceiling negotiations in US and fiscal problems in Greece, Spain and Italy have caused increasing in risk perception. Raising volatility in global financial market have affected domestic equity market adversely. Foreign equity holding ratio decreased from 66.4% to 62.2% in January 2011 – July 2011 period. weeks would move depending on Foreign equity ratio which has been in horizontal trend in recent weeks, investor’s risk appetites Vakıfbank Turkish Economy Weekly
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Non‐residents hold about 42 percent of the stock of government domestic debt... Non‐Residents' Holdings Of Government Domestic Debt Securities (as of total, %) ( )
50 45 40 35 30 25 20 15 10 5
05.02.2011 05.04.2011 05.06.2011
05.12.2010
05.08.2010 05.10.2010
05.06.2010
05.02.2010 05.04.2010
05.12.2009
05.08.2009 05.10.2009
05.06.2009
05.02.2009 05.04.2009
05.12.2008
05.10.2008
05.06.2008 05.08.2008
05.02.2008 05.04.2008
05.12.2007
05.08.2007 05.10.2007
05.06.2007
05.02.2007 05.04.2007
05.12.2006
05.10.2006
05.06.2006 05.08.2006
05.02.2006 05.04.2006
05.12.2005
05.10.2005
05.06.2005 05.08.2005
05.02.2005 05.04.2005
05.10.2004 05.12.2004
05.08.2004
05.02.2004 05.04.2004 05.06.2004
05.12.2003
0
Source: CBRT
The share of the non‐residents’ holdings of government domestic started to increase in the second half of the 2008. Non‐residents hold about 42 percent of the stock of government domestic debt. Currently, growing demand for government domestic debt by non‐residents is affected ff t d by b expectation t ti for f CBRT’s CBRT’ monetary t policy li desicions. d i i Vakıfbank Turkish Economy Weekly
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Serkan Özcan
Cem Eroğlu
Ümit Ünsal
Chief Economist Chief Economist
Senior Economist Senior Economist
Economist
+ 90 312 455 7087
+ 90 312 455 8480
+ 90 312 455 8418
[email protected]
[email protected]
[email protected]
Naime Doğan
Fatma Özlem Kanbur
Elif Artman
Researcher
Researcher
Reseacher
+ 90 312 455 8486
+ 90 312 455 8482
+ 90 312 455 8490
naime dogan@vakifbank com tr
[email protected]
fatmaozlem kanbur@vakifbank com tr
[email protected]
elif artman@vakifbank com tr
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T. Vakiflar Bankasi T.A.O Ataturk Bulvari No: 207 Kavaklidere 06683 Ankara, Turkey
Vakifbank Economic Research
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The information in this report has been obtained by Turkiye Vakiflar Bankası T.A.O. from sources believed to be reliable. However, Turkiye Vakiflar Bankası T.A.O. cannot guarantee the accuracy, adequacy, or completeness of such information, and cannot be responsible for the results of investment decisions made on account of this report. This document is not a solicitation to buy or sell any of the securities mentioned. All opinions and estimates included in this report constitute our judgment as of this date and are subject to change without notice. This report is to be distributed to professional emerging p g g markets investors only. y
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