Strategy Note - 2026 2H Outlook

2H26 Outlook – From One Tunnel To Another

2026 has begun in a positive market environment characterized by expectations of interest rate cuts, stronger economic growth, a weaker USD, and easing concerns over tariffs, alongside rising expectations for fiscal spending and policy stimulus. However, in the early days of the year, the United States' intervention in Venezuela, followed by the military conflict with Iran that began at the end of February, drove oil prices higher, intensifying inflation concerns, weakening growth expectations, strengthening the USD, and leading to significant divergences across financial asset classes and markets. As we enter the second half of the year, the market environment is characterized by a stabilization of growth expectations, a moderation of inflation concerns, and a reduction in geopolitical tensions. More importantly, the Federal Reserve's anticipated shift in interest rate cuts to hikes has led to a notable change in market expectations. In addition, artificial intelligence–driven business models and the US midterm elections are expected to be key themes during 2H26.

Our BIST 100 index target, calculated based on the target values of the companies in our valuation scope and their potential impact on the index, points to a level of 19,800 over a 12-month horizon and a potential return of 40% on the index. This potential is above the 25% annual CPI rate we forecast for the coming 12-month period and is close to the rates we found in our simulations of average net deposit returns achievable during this period. The average potential return for companies where we forecast above-index returns is around 54%.

The Tacirler Investment Model Portfolio we launched in June 2023 has delivered a nominal return of 252% over the past three years, while the BIST 100 index rose by 163% during this period. Accordingly, the Model Portfolio's relative performance against the index since inception indicates a positive return of 34%. However, over the past year, MP has underperformed the index. The primary reason for this is that certain companies, which exert a substantial influence on the index, are regarded as overvalued and consequently are not favoured by our models.

Our model portfolio currently comprises the following companies, listed in order of their respective inclussions: Migros, Turkish Airlines, Tüpraş, Coca-Cola Beverages, Mavi, Ford Otosan, İşbank (C), Tav Airports, Turkcell, Garanti Bank, Sabancı Holding, MLP Health and Astor Energy. Please note that we track the companies in our Model Portfolio and their performance on an equally weighted basis.