Borsa Istanbul's yield potential nears 100 percent

Published 27.04.2017 01:17
Updated 27.04.2017 01:38
Borsa Istanbul's yield potential nears 100 percent

Maintaining its upward movement since the pre-referendum period, the Borsa Istanbul 100, Turkey's benchmark index, opened yesterday at a historic high and hit above 95,000 after the central bank's decision on interest rates. Considering the increases and gains, the stock market is projected to bear almost 100 percent yield potential compared to leading stock exchanges

Borsa Istanbul is in a cheaper position compared to other stock markets and its own averages in terms of technical and basic indicators while it has occupied the headlines with its recent records.

In terms of price-earnings (P/E) ratio and market value comparison, which leads the way among the criteria used by analysts to decide on stock investments, Borsa Istanbul share markets display an image that can be considered as "cheap," while it is noteworthy that it points to a 95 percent yield potential in technical terms, according to the historical peak of the dollar-based BIST 100 index.

The average P/E ratios of the stocks traded on Borsa Istanbul indicate a significant yield potential compared to the leading stock exchanges. Considering the stock markets that have a place in the world markets in terms of depth and liquidity, the only country with a /E ratio below the five-year average is Turkey, while Russia leads the way with the lowest P/E ratio.

P/E, the ratio of a company's current share price relative to its per-share earnings, comes to the fore as one of the most influential indicators on investor decisions all over the world. The P/E ratio, which is one of the indicators used to compare companies and stocks with their counterparts and regard them as cheap or expensive, is being used by analysts as a guideline in terms of predicting the future price movements when calculating the expected per-share profit rather than the realized.

According to analysis by data terminals and investment companies, Indian and U.S. stock markets with P/E ratios approaching 18 percent became the two "most expensive" stock exchanges. When assessed in-house, on the other hand, the P/E ratios of these two stock markets rose to the highest levels in five years with recent increases.

While the average P/E ratio of the developed country stocks maintains a level just above 16 percent, the average P/E ratio of the developing country markets is around 12 percent.

The average P/E in Turkey's share markets, which is still slightly above 8 percent, indicates a significant discount in comparison to both other countries' markets and the 9.5 percent level exceeding its five-year average. On the basis of valuation, Turkey's share markets are trading at about 32 percent discount as P/E multiplier compared to the developing markets.

It is noteworthy that in Russia, which has a cheaper stock market image than Turkey with 5.5 percent, this ratio is above the five-year average in-house unlike in Turkey.

On the other hand, although the BIST 100 index reaches a record level with 94,880.68 points today in TL terms, the dollar-based course of the index needs to be followed to make accurate long-term assessments.

Accordingly, the BIST 100 index, which was in peak form with 48,000 points in 2007, 51,000 in 2010 and 50,000 in 2013, in dollar terms, could only reach 26,400 points this year with the rally, staying far from its highest point.

BIST 100 index reverses 4-year decline trend

The declines at the Borsa Istanbul that began after the last peak generally lasted a year; the dollar-based decline trend, following the peak of 2013, continued for four years until it reached 19,800 points in January this year.

The BIST 100 index, which recovered from the lowest level in eight years, in dollar terms, in the first week of the year, brought 32 percent to the investor with the rising rally that has been continuing to this day.

While the index rises to the 100-day moving average at 26,400 points with this recovery, it also surpasses the decline trend that had continued since 2013.

According to the total market value of companies traded at the stock exchange, the BIST 100 index points to a significant return potential in dollar terms. While the total market value of the companies traded was in the range of $550-$600 billion in 2007, although there were fewer companies open to the public in the stock market, this value is only $205 billion today.

BIST 100 index opens at historic high

After seeing record levels on Tuesday closing session, the BIST 100 index opened the day with a 0.04 percent increase at 94,6793.

While optimism on global markets brought strong purchases in the domestic share market, the BIST 100 index reached 94,634.91 points on Tuesday, completing the day at the highest level seen both within the day and throughout its history.

The banking index decreased by 0.06 percent, while the holding index rose by 0.17 percent. Among the sector indexes, communication leads the way with 0.62 percent, while metal goods, machinery have become the most regressive sector with 0.34 percent.

In technical terms, analysts suggest that the 95,000 and 97,700 point levels of the BIST 100 index are in a resistance position, while 92,400 points would be the support position.

BIST, closing at 94,635 points, will try to move to the band of 95,000-95,300 points. As first support in withdrawals, 94,000 points should be followed, according to Vakıf Yatırım.

In the index, which is expected to make a positive start to the day, the 95,000 point resistance is important in the first stage. If this is also exceeded, the index will target 96,250 points resistance, the Finansinvest noted. The optimistic atmosphere continues on the global markets. We recommend preserving existing trade positions.

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