Lira under pressure

Dunya Executive - - REPORT -

David Aserkoff, chief emerging market strategist, J.P. Morgan:

We expect the lira to come under pressure again. We do not find the valuation of the Turkish stock market compellingly cheap. We believe weakening growth, a weaker lira and higher bond yields have yet to be priced into earnings. Looking at earnings per share (EPS) trends for sectors, analysts have revised down their 2016 EPS numbers, but haven’t changed 2017 numbers yet for telecoms, staples and industrials; these three sectors make up 30 percent of the MSCI Turkey. When we cut EPS by 15 percent to account for foreignexchange weakness, slower growth and higher yields, MSCI trades at a premium to its 10-year average. (March 19)

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