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The effects of the movements that the Central Bank (CBRT) called “normalization” continue, which began with the rise in interest rates and continued with tax cuts in income from interest on deposits and purchases of foreign currency. For the first time since 2018, the largest foreign inflow in portfolio investment on a weekly basis was recorded in the week of October 2. There was a purchase of $ 131 million in stocks, $ 479 million in bonds and bills, and a total of $ 610 million. However, after the interest rate hike, bond purchases started partially. In the week of September 25, 101 million dollars in shares were sold, while 115 million dollars in bonds were bought In our article last week, we evaluated the effect of the rise in interest rates and the first signs of change position of foreigners.
MUST CONTINUE
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Compliance with the market and foreign capital is important. In addition, it is even more important in this period when external financing needs are high. It is pleasant to see the re-entry of foreign capital, the outflows of which we have seen in a long period of time. However, you must continue. In addition to the outputs so far, the inputs in the last two weeks can be seen as a very small amount. On the other hand, last week the Treasury borrowed 2.5 billion dollars in foreign markets. However, outsiders low interest rates and abundant liquidity with a significant advantage if we do not see very serious repercussions for Turkey. Policies of low interest and monetary expansion will continue for a longer period of time.
OFFERS OPPORTUNITY
If conditions become more favorable, it is likely that we will see the effects of this situation in the conjuncture. In fact, conditions such as rising exchange rates, high interest rates and the fact that Borsa Istanbul is less premium than foreign currencies offer a significant opportunity for foreigners to enter the Turkish markets. But it seems that we have not yet benefited much from this situation. In this context, it will be important for it to decline and become a more stable geopolitical development of the high-efficiency course of Turkey’s CDS rates.
OCTOBER 22 THE CENTRAL BANK MEETING IS EXPECTED
Although the SEPTEMBER inflation remained slightly below expectations, the CBRT’s expectations of increasing interest rates were expressed in the markets at the October 22 meeting. The CBRT’s hike in the benchmark rate at the last meeting after the covert interest rate hike points to a major policy shift. In addition, the Central Bank’s increase in the Turkish lira interest used in swap transactions on Friday from 10.25 percent to 11.75 percent should be seen as a continuation of this policy. Taking into account the effects of the recent interest rate hike on investors and foreign markets, the possibility of a rate hike to make the TL more attractive appears to have increased. The price of money is interest. The rate hike is a decision taken to stop the rise in exchange rates. Because it was not possible to stop the rise in exchange rates by selling currencies. It also caused the erosion of central bank reserves. While there is a low interest environment in the outside world, it is not desirable to increase interest rates. It is also a matter of discussion whether the higher interest rate will have a negative and decelerating effect on the economic recovery. At this point preferences stand out. This period, the preference of the CBRT is also clear.
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ATTENTION TO RESISTANCES IN EXCHANGE
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Although the reaction in the EXCHANGE continues to increase, he has a difficult time passing the resistance levels. However, inbound sales encounter reaction buys at support points during withdrawals. While initial resistance is at 1,170, it will be necessary to stay above this level for the exit to continue. In this case, the next resistance levels are at 1,185-1,200. In withdrawals, the first supports are at the levels of 1,150 and 1,143. It will be important to stay above these levels to maintain the strength of the escalation of the reaction. Otherwise, the next supports are at levels 1,130 and 1,118. Although the exit move remains in the index, it is highly likely that it will find selling at resistance levels.
SALES OF BENEFITS ARE SEEN IN DOLLAR / TL
While the uptrend continues in the DOLLAR / TL exchange rate, significant resistance levels are tested. Initial resistances are at the 7.95 and 7.98 levels. These levels are important in terms of the resistance of the output channel. In this sense, earnings sales can be seen at these levels. In case of holding above the 7.98 level, higher resistance levels may hit the agenda with the continuation of the exit. Initial support in withdrawals is at levels 7.83-7.80. If it is below this level, the next support levels are seen at 7.72-7.68. Exit attempts that do not exceed 7.98 may face profitable sales.
THE ABOVE INFORMATION IS NOT RECOMMENDED AND IS NOT IN THE SCOPE OF INVESTMENT CONSULTANCY AND MAY NOT SUIT YOUR INVESTOR PROFILE.
ELECTIONS IN THE UNITED STATES ARE IMPORTANT
The fluctuating course continues in the MARKETS due to the president of the United States, Trump. Trump’s remarks about the ‘stimulus package’ after his COVID-19 test came back positive first, then hospitalization, prompt discharge and discharge, resonated in the markets. In a sense, the phrase “every event he said” was remembered. However, his constructive remarks on the incentive package, which he said he postponed until after the elections, had a positive effect on the markets. There was a bullish movement in the stock markets, especially in the US, an increase in reaction after the selling of gains in gold prices and slight falls in the US dollar (dollar index).
THE SURVEYS SAY BIDEN
It is difficult to say that the optimism abroad is reflected to the same extent in the domestic markets. When we analyze the reasons for this, we will have to take into account the pressure of rising exchange rates in Borsa Istanbul and geopolitical developments. In this context, the Azerbaijan-Armenian war, the permanent tension with Greece in the Eastern Mediterranean, the S-400 issue are the issues that are closely followed by the markets. In addition, the US presidential elections on November 3 are important for the domestic and foreign markets. Democratic candidate Jeo Biden appears to be ahead in the polls and is likely to win. It is always necessary to leave a separate place for surprises in the electoral results. Like the election in which Trump was president. Clinton was ahead in the polls, but Trump won the election. If Biden comes to world politics, which would be the global market, he will take what the discussion in the past brings about his well-known speeches from Turkey. In this sense, national markets may not be very interested in choosing Biden in his current form.
POSITIVE WEATHER
It is also useful to emphasize that. As many examples have been seen in the past, there can be serious changes in speech and attitudes before and after elections. There isn’t much time left until November 3. There seems to be an effort to stay optimistic in US markets ahead of the election. We would not be wrong to say that the upcoming elections have an impact on Trump’s change in attitude towards the stimulus package. In addition, it is a subject in which more incentives are mentioned in the statements coming from the United States Federal Reserve (Fed) and in the Fed minutes. It should be noted that more incentives are needed for the continuation of the economic recovery and it remains a sustained economy. In a way, it shows the damage caused by this pandemic. Stock markets continue to look in the mirror and try to keep the atmosphere positive. But there is a bit of fatigue, of course.
‘SAFE PORT’ COMPETITION BETWEEN GOLD AND DOLLAR
In recent days, when the US dollar gained value in foreign markets, gold prices declined. However, he then stepped back on this decision and declared that “the incentive package negotiations with the Democrats are moving in a constructive direction”, this time the rise in the price of gold was reflected as a sale to the US dollar. During this fluctuation, the perception of safe haven changes hands. However, when it comes to safe harbor, gold keeps coming to mind first and it seems like it will.
