JPMorgan has published a valuation report on Turkish banks. Accordingly, the company has increased its recommendation from “weight down” to “neutral”, especially for long-term Turkish bank bonds, and from “neutral” to “increase weight” for two bank bonds.
Pointing out that Turkish bonds showed a strong performance last week due to the arguments that market-friendly appointments will be made to the new cabinet, JPMorgan said, “However, these appointments and possible policy changes remain unknown. Therefore, we choose a stance close to “neutral” in bank bonds.
Our overall stance is “neutral”, although bank bonds seem attractive.
The company stated that bank bonds continue to look attractive despite the latest pressures.
The report, published by JPMorgan, stated that while banks generally chose a “neutral” stance for their senior bonds, they recommended “increase the weight” for Garanti Bank’s 2027 and ISCTR’s 2028 bonds.
The Bank changed its recommendation from “weight down” to “neutral” for Akbank’s 2025 and 2026 maturity bonds, Vakıfbank’s 2026, TSKB’s 2026 and Türk Eximbank’s 2026 bonds.
“Foreign exchange reserves and current account stability may strengthen in a positive scenario”
It was noted that in the positive scenario, a possible monetary policy change together with market-friendly appointments can be expected to reduce both outflows and local demand on the foreign exchange side.
The Bank predicted that factors such as credit tightening through interest, balancing at the expense of TL and low power prices will help current account stability.
The company stated that before the autumn period, which is expected to be potentially more pressured in the positive scenario, a measure recovery can be expected in the foreign exchange reserves thanks to the strengthened current account stability in the summer.
In the negative scenario, it is predicted that there will be foreign exchange outflows due to insecurity in the near term, the deterioration in current account stability will become permanent and the foreign exchange inflow, which is currently low, will remain at a disappointing level and contribute to the loss of reserves.
It was stated that this situation would limit the authorities’ capacity to control the fluctuations in TL and this would result in fluctuations in the local funding of the banks.
Source: Bloomberg HT