Daily Bulletin

Good morning. Buying interest in U.S. technology stocks and strengthening expectations of a Fed rate cut on September 17 are supporting global risk appetite. U.S. and European futures are trading in positive territory this morning, while in Asia, selling pressure has emerged in China and Hong Kong following regulatory measures; however, other regional markets are trading higher. In Borsa Istanbul, a fragile trend driven by political risks continues. As we noted yesterday, until September 15, the market is likely to react more strongly to negative developments while pricing positive news more moderately. Indeed, after an inflation reading that came in slightly above expectations, the BIST 100 index fell by as much as 2% in early trading, retesting the 10,600 support level for the second time, before closing the day at 10,737 with a 1.3% decline. Following three consecutive developments—the stronger-than-expected growth data, the ruling concerning the CHP Istanbul provincial organization, and the higher-than-expected inflation—we observe that expectations for a rate cut at the September 11 MPC meeting have been scaled back. In parallel, there has been an outflow from the Borsa, led by foreign investors. On 12-month forward valuations, BIST 100 index targets are now approaching the 15,000 level, pointing to nearly 40% upside potential. While downward revisions to these targets are possible, the upside potential remains significant. On today’s agenda, domestic focus will be on CBRT reserves and weekly foreign flow data, while in the U.S., private sector employment figures will be watched. Notably, Bloomberg reported yesterday that the CBRT may have used around USD 5 billion in reserves on September 2–3, which is nearly three times the amount deployed over two days following March 19. Turkey’s 5-year CDS premiums start the day at 270 basis points.