Macro and Politics

* TURKSTAT will release August Industrial Production (IP) figures today @ 10:00 local time. The sequential (the seasonally and calendar adjusted monthly figure) industrial production (IP) decreased by 1.8% m/m in July, while the calendar adjusted IP increased by 5% y/y. Foreign trade data serve as a key leading indicator for our industrial production forecasts. In August, imports of intermediate goods excluding gold and energy declined by 18.3% on a monthly basis and by 2.6% year-on-year. Another major leading indicator, the Istanbul Chamber of Industry (ICI) Turkey Manufacturing PMI, rose from 45.9 to 47.3 in August — marking its first increase since January. However, the index remaining below the 50-threshold continued to signal a contraction in manufacturing activity. In line with these leading indicators, we expect seasonally adjusted monthly industrial production to remain in contraction territory in August, while calendar-adjusted output is likely to show a year-on-year decline compared to the previous month.

* The CBT will release weekly foreign portfolio flows, money & banking statistics, and international reserves for the period of September 26 – October 3 @ 14:30 local time. Based on our calculations using the CBT’s analytical balance sheet, we estimate that during the week of September 26 – October 3, net international reserves rose by USD2.55bn to USD75.2bn, while gross FX reserves increased by USD3.23bn to USD186.4bn. We anticipate that today’s official reserve data will likely reflect a similar rise in line with our estimates. To recall the previous week’s data: Foreign investors were net buyers through standard portfolio channels in the week of September 19 – 26, recording net inflows of USD158.8mn into the equity market and USD415.7mn into the bond market (excluding repo transactions). The foreign share in the total government bond stock increased from 6.6% to 6.8%. Moreover, during the week of September 19 – 26, the residents’ FX deposits slumped by USD1.8bn (excluding gold accounts and adjusted for the EUR/USD parity effect), while their total FX deposits (including gold, price adjusted) tumbled by USD1.2bn during the week of September 19 – 26. In terms of official reserves, the CBT’s gross FX reserves increased by USD4.1bn to USD183.1bn and net international reserves rose by USD2.3bn to USD72.7bn, while net reserves excluding swaps climbed by USD4.1bn to USD57.1bn.