Financial markets left behind a very turbulent month of March due to the new type of coronavirus (Covid-19) epidemic. While almost all indices in global equity markets lost value in March, the steps taken by the US Federal Reserve (Fed) and the European Central Bank (ECB) to provide liquidity ensured a relative decrease in volatility.
Although the BIST 100 index, which started March at 108,379.30, rose to 113,106.60 points in the first days of March, it fell to 81,936.40 points in parallel with the sales wave in global equity markets due to increasing epidemic concerns.
Although the BIST 100 index partially compensated for its losses with the positive impact of the steps taken by the Central Bank of the Republic of Turkey (CBRT) and the economic management, as well as the measures taken globally, it lost 15.43 percent of its value in March compared to the previous month’s closing, and has remained unchanged since October 2008. It recorded its steepest monthly decline since then and completed March at 89,643.71 points.
In March, the banking index lost 15.98 percent and the holding index lost 17.05 percent. Among the sector indices, the only gainer was trade with 0.50 percent, and the biggest decline was sports with 37.86 percent.
“There is a gradual effort to balance the markets.”
İnfo Investment Deputy General Manager Mert Yılmaz, in his statement to the AA correspondent on the subject, said that although the panic experienced in March due to the Covid-19 epidemic has relatively eased, it is still difficult to predict what will happen in the future.
Noting that central banks are trying to support the economy with both monetary policies and governments’ fiscal policies, Yılmaz said, “The primary aim was to prevent a liquidity problem from arising all over the world, but for now it seems that such a problem has not occurred.” he said.
Yılmaz stated that since the current situation is a pandemic problem, it is not possible to predict to what extent the steps taken will be responded to, and that the basic scenario for normalization is primarily the deceleration of the Covid-19 epidemic.
Pointing out that there was a fear of a serious collateral deficit in the markets in the early stages of the panic, Yılmaz said, “In this process, everyone anxiously sold everything they had, from oil to gold to stocks. Now, there is a gradual effort to balance.” he used his words.
Yılmaz stated that South Africa’s loss of its investment grade rating puts pressure on other developing country currencies, and that the most important risk for Turkey in this situation is the rise in the CDS risk premium.
“Gradual purchase time”
Stating that a very rapid sales movement was seen in the BIST 100 index, starting from 124,500 and reaching up to 82,000, Yılmaz made the following evaluations;
“We saw that the majority of investors could not use stop-loss. Unfortunately, new investors who came after many years created a new group of victims again and suffered serious money losses. There is an attempt to hold on to around 82,000. I think it will hold on there if the news flow does not get worse. But it will undoubtedly take time for a trend to emerge. We should not forget that short-term transactions still carry a serious risk. But I think we can start making gradual purchases in the right sectors and companies, without ignoring that the index may fall a little lower, that is, below 82,000. .”
Yılmaz pointed out that one should not carry a credit position and that it is not right to make too many daily transactions, and noted that if the BIST 100 index rises above 93,000 in the first place, the market can take a breather.
Stating that when the problem disappears or slows down, there will be a value gain in Turkish assets, as in all developing countries, Yılmaz said, “But we need to look at where the pricing will be when the nightmare is over. On the other hand, there is a tremendous abundance of liquidity in the world. It even looks like it may increase even more.” That’s why Turkey needs to establish as accurate communications as possible in order to get a bigger share here.” said.
Yilmaz stated that the decline in oil prices will have a positive impact on the Turkish economy, but the positive impact that will come from this will not be enough to offset the negative impact that will come from tourism and exports, so Turkey’s growth forecasts may slowly start to move towards the 2-3 percent band in the coming days.
“The measures taken are stabilizing in the short term”
AA Finance Analyst Cüneyt Paksoy also noted that as we enter April, volatility has entered a limited balancing act, but for this to be permanent, the graphs regarding the impact of the virus must peak on a global scale and turn into a horizontal and decreasing trend.
Paksoy stated that the S&P 500 index in the USA fell very quickly from 3,300 levels to the 2,000-2,200 band, accompanied by consecutive days of high percentage sellers, and reminded that European stock markets suffered serious losses, led by the DAX index in Germany.
Paksoy noted that parallel to this process, there is a movement towards 6.60 levels in dollar/TL in Turkey and a limited increase in bond interest rates is observed for now.
Reminding that simultaneous measures were taken regarding the Covid-19 epidemic under the leadership of the economic management, CBRT, Banking Regulation and Supervision Agency (BDDK) and public banks, Paksoy pointed out that the measures may have a stabilizing effect in the short term and a leveraged correction effect in the medium and long term depending on the normalization process.
Paksoy stated that the 200-day average break in the BIST 100 index, which is technically seen as a trend change signal and occurs around 105-106 thousand, remaining a violation is very important for a return to the rising trend.
Noting that after the 90,000-93,000 band, the 97,000-100,000 levels stand out as important resistance areas, Paksoy said that the 80,000-83,000 support will be followed in downward movements.
Source: https://www.aa.com.tr/tr/ekonomi/borsada-nisan-ayinin-gundemi-yine-kovid-19-olacak/1787505
