Markets around the world, especially in America and Europe, are trying to find direction. Central bank interest rate decisions affect the course of investment preferences.

Inflation; When it comes to pandemic effect, war effect, commodity effect, supply chain effect, it finds a reason to constantly increase. Inflation, which used to be considered temporary and not so significant, has become a problem globally. Our country, on the other hand, experiences this in its warmest form. The negative side of inflation not only erodes purchasing power, but also negatively affects investment and growth. At the current juncture, inflation has heightened concerns about growth in countries around the world. Central banks mainly use the interest argument to deal with inflation. Central banks in different countries are fighting inflation by introducing additional local measures. Despite all this, it is too early to say that inflation is under control, let alone falling.

Our country also experiences this problem at a high level. Those who have cash find that what they have melts quickly. The rush to preserve their savings and protect against the corrosive nature of inflation inevitably seems to have reached a fever pitch. Therefore, the desire to be in a safe harbor prevails. Those with cash turn to forex and currency-based instruments. Those who prefer riskier investment instruments also tend to look to the stock market.

Market prices and cash management

Stock market position

The stock market is above average. The daily volume is 37.8 billion TL. There are selective movements based on actions. It is important that the index remains above the averages for the continuity of the rise. The BIST 100 index closed the week at 2,516 points with an increase of 5.63%. Its eight-day average stands at 2,482. As long as the move above the eight-day average continues, the index can maintain its strength.

Beware of the 9 banks!

Bank stocks gained an average of 9% in one week. Nine banks are trading at 50% below book value.

Nine publicly traded bank stocks are trading below their book value. The market value of the nine banks with a total capital of 528 billion TL is 261 billion TL. The average book value ratio is 0.50. The shares fell to half of their equity. Vakıfbank, Halk Bankası and İş Bankası C shares are the bank shares with the lowest book value.

Will banks continue to trade below book value? Banking stocks have long been out of the sectors of interest to investors. Due to their liquidity, they are among the most sold stocks by foreigners.

Sales abroad

Since 2018, there has been a $3.4 billion offshore sale of bank stocks. The biggest sales were in 2018 and during the pandemic period. Sales for the January-June 2022 period are $498 million. A limited effect on sales is observed, as large outflows occurred during the 2018 currency attack and the pandemic.

9% increase in one week

Bank stocks gained 9% last week. The fact that stocks are at historic lows in dollar terms is the most important reason for their demand. The fact that the demand is not long-term leads to a limitation of the outputs.

Market prices and cash management

What will the Fed do?

Looking at the actions of central banks, we see that growth concerns outweigh inflation concerns.
While annual inflation was 8.6% in the euro zone, it reached 9.1% in the United States. A base rate hike of 75% is expected at the Fed’s meeting on July 26-27.

What should you pay attention to during the balance sheet season?

The financial results of listed companies for the second quarter of the year will start arriving from July 26. The submission date for the non-consolidated financial statements will be August 9 and the due date for the disclosure of the consolidated financial statements will be August 19.

The balance sheets to be announced by companies are important. Because the first six months will reveal the evolution. Since the main companies of the sectors are included in the stock market, there will be an opportunity to see the photo of their development.

The main things investors will look for in balance sheets are:

1 Is there an increase in business turnover and profits?

2 Is the increase in turnover and profit of the company real?

3 Is there growth in return on assets and return on equity for companies? The high return on equity and its progression will also reveal the performance of management.

4 Is the increase in cost elements consistent with revenues?

5 Is the growth rate higher than the previous period?

What does the ECB decision mean?

After global inflation rises, central banks raise interest rates. The European Central Bank (ECB) raised interest rates by 50 basis points for the first time in 11 years. The ECB decided to raise interest rates just after the annual inflation rate in the euro zone hit a record 8.6% in June. The ECB announced a marginal funding rate of 0.75%, a main refinancing rate of 0.5% and a deposit rate of 0%.

Number of investors 2 million 509 thousand

On the Borsa Istanbul stock market, the number of investors with a balance increased in the first half of this year. The number of investors with a balance on the Borsa Istanbul stock market, which stood at 2 million 355,000 at the end of 2021, increased by around 154,000 in six months and reached 2 million 509,000 in June. The number of investors (active investors) who trade at least once a month on the stock exchange decreased by 193,000 compared to the end of last year and fell to 1 million 219,000 at the end of May this year.

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