Turkey’s interest rate could be halved by the end of 2025: The Turkish central bank could be set to begin a cycle of rate cuts starting November that would carry through until the end of next year, the CEO of Turkey’s largest private bank Isbank, Hakan Aran, told Bloomberg. Aran sees the bank halving rates to 25% by 2025 from their current 50%.

The bank kept interest rates unchanged at 50% for a fifth consecutive month last week. The bank last hiked rates in March as part of a wider tightening cycle that began a little over a year ago following the re-election of Turkish President Recep Tayyip Erdogan. The central bank has raised rates by a total of 4,150 basis points since June 2023.

“I am not worried about a hard landing or a recession,” Aran told Bloomberg. “I believe the current policies will both lead Turkey to attain price stability and maintain growth, albeit slower than its potential,” he said. The CEO sees growth rates slowing to 3.5% and inflation to 42% by the end of the year, down from the current 62%. Akan’s prediction is slightly less optimistic than that of the central bank, which is targeting year-end inflation of 38%.

Remember: Turkey’s economic policy has been seeing something of a turnaround — one that has caught the eye of investors, with nearly USD 30 bn being channeled from abroad into Turkish stocks and bonds since May 2023. Many point to the appointment of former economy chief Mehmet Simsek as treasury and finance minister as the turning point that set the country on its current trajectory, with Simsek’s stint seeing a reversal of decades of unorthodox monetary policy that saw the Turkish central bank cut interest rates in the face of double-digit inflation.

MARKETS THIS MORNING-

Asian markers are mixed in early trading this morning as traders weigh up dovish comments from senior US Fed officials and the risk of a regional war breaking out in our part of the world as Israel and Lebanon’s Hezbollah exchange missiles. Japan’s Nikkei is down 1.2% and China’s Shanghai index is essentially flat, while Korea’s benchmark Kospi is up 0.2%.

TASI

12,262

+0.6% (YTD: +2.5%)

MSCI Tadawul 30

1,537

+0.8% (YTD: -0.9%)

NomuC

26,690

+0.4% (YTD: +8.8%)

USD : SAR (SAMA)

USD 3.75 Sell

USD 3.75 Buy

Interest rates

6.5% repo

5.5% reverse repo

EGX30

30,074

-0.2% (YTD: +20.8%)

ADX

9,374

0.0% (YTD: -2.1%)

DFM

4,293

-0.4% (YTD: +5.7%)

S&P 500

5,635

+1.2% (YTD: +18.1%)

FTSE 100

8,328

+0.5% (YTD: +7.7%)

Euro Stoxx 50

4,909

+0.5% (YTD: +8.6%)

Brent crude

USD 79.02

+2.3%

Natural gas (Nymex)

USD 2.02

-1.5%

Gold

USD 2,546

+1.2%

BTC

USD 64,236.60

+0.1% (YTD: +51.9%)

THE CLOSING BELL: TADAWUL-

The TASI rose 0.6% yesterday on turnover of SAR 7.95 bn. The index is up 2.5% YTD.

In the green: STC (+9.9%), Saudi Re (+9.9%) and Sasco (+6.5%).

In the red: Al Baha (-7.7%), Raydan (-3.6%) and Miahona (-3,3%).

THE CLOSING BELL: NOMU-

The NomuC rose 0.4% yesterday on turnover of SAR 44 mn. The index is up 8.8% YTD.

In the green: Lana (+9.2%), Networkers (+5.2%) and Osool and Bakheet (+5.0%).

In the red: Neft Al Sharq (-11.8%), Taqat (-9.2%) and View (-8.2%)

CORPORATE ACTIONS-

#1- Saudi Manpower Solutions Company (Smasco) will distribute SAR 48 mn in dividends at SAR 0.12 riyals per share for 1H 2024, it said in a disclosure to Tadawul. Distribution is set for Tuesday, 10 September.

#2- SNB Capital will distribute SAR 34.4 mn in dividends at SAR 0.25 per unit to unitholders of AlAhli REIT Fund (1) for 1H 2024, it said in a disclosure to Tadawul.

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