MONTHLY MARKET OUTLOOK (QNB INVEST)
MONTHLY MARKET OUTLOOK (QNB INVEST)
NOVEMBER: CHEAP, BUT WAITING FOR LIQUIDITY
OCTOBER WAS A MONTH IN WHICH FUNDAMENTALS HELD UP, BUT LIQUIDITY DID NOT. THE BIST-100 LOST 9.9% DURING THE MONTH, AS FUND-RELATED SELLING, THIN VOLUMES AND WEAK NEW MONEY INFLOWS KEPT THE PRESSURE ON, WHILE DAILY TURNOVER FELL TO USD2.9BN, HALF ITS AUGUST LEVEL, AND THE TOP-10 STOCKS ACCOUNTED FOR 47% OF TOTAL VOLUME. ON THE MACRO SIDE, THE PICTURE REMAINED ON TRACK. OCTOBER INFLATION CAME IN AT 2.6% MOM, SLIGHTLY ABOVE EXPECTATIONS DUE TO ENERGY AND FOOD, BUT SERVICES AND CORE INFLATION CONTINUED TO SLOW, AND THE CBRT CUT ITS POLICY RATE BY 100BP TO 36%. THE LIRA HELD UP, WITH ITS MONTHLY DEPRECIATION AGAINST THE FX BASKET REMAINING BELOW 1%, BUT AT A COST TO RESERVES, AS NET RESERVES EXCLUDING SWAPS FELL TO USD24BN FROM USD57BN AT END-AUGUST, MAINLY DUE TO FUND-RELATED OUTFLOWS RATHER THAN DOLLARIZATION. IN EARLY NOVEMBER, THE SHARP DECLINE IN OIL PRICES PARTIALLY IMPROVED THE MACRO-OUTLOOK, BUT LOW LIQUIDITY AND THE ONGOING LOSS OF CONFIDENCE REMAIN IN PLAY. ON TOP OF THIS, THE 3Q26 EARNINGS SEASON CAME IN BELOW OUR ESTIMATES, WITH EX-TUPRS BIST-100 EARNINGS DOWN 6.1% YOY, AND THE SHARE PRICE REACTION TO STRONG RESULTS REMAINED LIMITED, EXCEPT IN AVIATION. IN PAST PERIODS OF CONCENTRATED VOLUMES, THE MARKET RECOVERED STRONGLY ONCE VOLUMES NORMALIZED, WHICH WE SEE AS THE KEY PRECONDITION TODAY. ONCE VOLUMES NORMALIZE, STRONG 4Q26 EARNINGS GROWTH OF 39% AND A MORE CONSTRUCTIVE MACRO BACKDROP MAY ACT AS STRONG CATALYSTS FOR THE MARKET, AS ITS DISCOUNT THEME HAS BECOME HIGHLY VISIBLE, GIVEN THAT BIST STOCKS HAVE FALLEN BY 34% ON AVERAGE SINCE END-AUGUST AND THE INDEX TRADES AT A 38% DISCOUNT ON ITS 2027 MULTIPLES. HOWEVER, UNTIL VOLUMES NORMALIZE, WE STILL KEEP OUR BIST-30-FOCUSED TOP PICKS UNCHANGED: AKBNK, AKSEN, ASELS, BIMAS, KRDMD AND TUPRS.
MACRO ON TRACK, THE LIRA HELD AT A COST TO RESERVES: OCTOBER CPI ROSE BY 2.6% MOM, WITH THE UPSIDE COMING FROM ENERGY AND FOOD, WHILE SERVICES INFLATION SLOWED TO 1.0% MOM AND CORE INFLATION EASED FURTHER. WE REVISE OUR YEAR-END 2026 INFLATION FORECAST TO 29.5% FROM 29.0%, KEEP 25% FOR 2027 AND EXPECT ANOTHER 100BP CUT ON 10 DECEMBER. NET RESERVES EXCLUDING SWAPS FELL BY USD33BN IN TWO MONTHS, BUT WE SEE THIS AS THE COST OF A ONE-OFF LIQUIDITY EVENT: HOUSEHOLDS’ USD17BN OF OUTFLOWS FROM TRY ASSETS CAME ALMOST ENTIRELY FROM MONEY MARKET FUNDS, AND THEY ALSO REDUCED THEIR FX ASSETS BY USD16BN. WITH FUND-RELATED OUTFLOWS FADING, LOWER OIL PRICES AND A CURRENT ACCOUNT SURPLUS, WE EXPECT THE PRESSURE ON RESERVES TO EASE, IN LINE WITH OUR YEAR-END USD/TRY FORECAST OF 51.9.
A NARROW MARKET, WAITING FOR VOLUME: THE SHARE OF THE TOP-10 STOCKS IN TOTAL VOLUME ROSE TO 53% IN THE FIRST WEEK OF NOVEMBER, WHILE THE VOLUME TRADED PER 1% PRICE MOVE IN THESE STOCKS FELL TO ITS LOWEST LEVEL IN THREE YEARS, POINTING TO A NARROWER RATHER THAN A DEEPER MARKET. SIMILAR PERIODS IN JULY 2022 AND APRIL 2023 WERE FOLLOWED BY A SIDEWAYS MARKET FOR AROUND 60 DAYS AND A 35% RALLY IN THE FOLLOWING TWO MONTHS ONCE VOLUMES NORMALIZED. WITH BIST STOCKS DOWN 34% SINCE END-AUGUST AND THE INDEX AT A 43% DISCOUNT ON ITS 2027 MULTIPLES, WE SEE A SIMILAR RECOVERY POTENTIAL, BUT TURNOVER IS STILL 41% BELOW ITS AUGUST LEVEL AND EQUITY FUND AUM HAS FALLEN BY 25%, SO WE STAY WITH LIQUID BIST-30 NAMES FOR NOW.
EARNINGS: LIMITED REACTION, LOW BASE AHEAD: BIST-100 EARNINGS ROSE BY 7.8% YOY IN 3Q26, BELOW OUR 15.9% ESTIMATE, AND FELL BY 6.1% EXC. TUPRS. STRONG BEATS HAD LITTLE IMPACT ON SHARE PRICES, WITH AN AVERAGE REACTION OF -0.3PP, WHILE AVIATION RALLIED ON LOWER OIL PRICES. FOR 4Q26, THE LOW BASE OF 4Q25, WHEN THE FULL-YEAR TAX CHARGES WERE BOOKED AFTER INFLATION ACCOUNTING WAS ABOLISHED FOR TAX PURPOSES, POINTS TO 39% YOY EARNINGS GROWTH, WHICH, TOGETHER WITH JANUARY SEASONALITY, MAY BE THE FIRST SOLID CATALYST FOR 2027.
WHAT TO WATCH FOR IN NOVEMBER: THE DECLINE IN OIL PRICES HAS NOT BEEN REFLECTED IN MIDDLE DISTILLATE CRACK SPREADS, AND TUPRS IS NOW TRADING AT 1.8X EV/EBITDA WITH AN 18% DY FOR 2026F. THE LOCAL AIRLINES DEMONSTRATED THEIR OPERATIONAL RESILIENCE IN 3Q, WITH MORE OR LESS STABLE OPERATING PROFITABILITY VERSUS DOUBLE-DIGIT DECLINES IN EUROPE. ALTHOUGH 4Q RESULTS ARE LIKELY TO BE WEAK, WE STILL CONSIDER THEM THE BEST PLAY ON THE END OF THE US-IRAN WAR, ESPECIALLY THYAO. WE FIND ASELS`S 10% UNDERPERFORMANCE OVER THE MONTH UNJUSTIFIED, NOTING THAT THE STOCK HAS OUTPERFORMED THE BIST-100 IN EVERY FOURTH QUARTER, BY AN AVERAGE OF 15.5% (29.5%), MAKING 4Q ITS STRONGEST QUARTER OF THE YEAR. ALONG WITH ITS RESILIENT OPERATIONAL PERFORMANCE IN 3Q AND A FORECAST DIVIDEND YIELD OF 7.4% FOR 2027, WE CONTINUE TO SEE ENJSA AS ONE OF THE MOST DEFENSIVE NAMES IN THE BIST UNIVERSE.
QNB INVEST ARASTIRMA
QNB YATIRIM MENKUL DEGERLER A.S.
HTTPS://WWW.QNBINVEST.COM.TR/
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