Macro and Politics

* TURKSTAT will release August industrial production (IP) figures today at 10:00 local time. Foreign trade data provide important signals for the industrial production outlook. The trend in intermediate goods imports excluding gold and energy suggests that weakness in industrial activity persisted into August. Other leading indicators for the month also point to a possible further contraction in industrial production, following declines of 1% m/m and 0.3% y/y in July.

* Foreign investors were net sellers of USD190mn in equities and USD485mn in bonds (excluding repo transactions) during the September 25–October 2 week. The reversal in equity flows followed net purchases of USD360mn in the previoys week, while foreign selling in the bond market continued for a third straight week. Foreigners’ share in the total bond stock slipped to 6.6%, its lowest level since early July. Moreover, residents’ FX deposits (excluding gold and adjusted for the EUR/USD parity effect) rose by USD984mn over the same week, while their total FX deposits (including gold, adjusted for the price effect) grew by USD851mn. Besides, the CBT’s gross reserves fell by USD3.8bn to USD167.4bn in the September 25–October 2 week, extending its decline to six successive weeks, with a cumulative loss of USD21.1bn. Net reserves, by contrast, edged up merely by USD407mn to USD53.7bn. The swap stock increased by USD2.4bn to USD15.9bn, leaving net reserves excluding swaps USD2bn lower at USD37.8bn.