Investors take notes! Experts announce profitable sectors for 2024

The BIST 100 index in Borsa Istanbul has seen a significant rise of 75% since the general elections. Despite experiencing fluctuations earlier in the year due to the earthquakes on February 6th, the index rallied following the elections and the new economic policies implemented by the administration. Since the conclusion of the second round of general elections, the BIST 100 index has not only gained about 75% in value but also recorded a 46% increase since the beginning of the year, reaching a record high of 8,513.54 points.

In the sectoral breakdown, the insurance sector emerged as the top gainer, witnessing a 167% increase since the beginning of the year, while mining saw the most significant decline at 0.87%. The banking index rose by 72%, and the holding index increased by 41%.

Additionally, gold prices and the dollar/TL rate have both seen substantial increases since the beginning of the year, with gold prices rising by 75% and the dollar/TL rate gaining 54% in value.

Turkey's 5-year credit default swap (CDS), which stood at 700 basis points in May, has continued its downward trend, reaching its lowest daily close of 332.8 basis points since March 19, 2021, on Thursday.

Following the elections, the new economic administration's policies and meetings with foreign investors have led to a series of positive evaluations from international credit rating agencies for Turkey. This positive outlook is also reflected in the falling CDS trend, which is an indicator of the improved perception of Turkey's economy.

Üzeyir Doğan of PhillipCapital pointed out that despite the start of foreign investments in both bonds and the stock market, the expected upward movement in Borsa Istanbul has not yet materialized. However, he sees the current level as an opportunity for buying. According to Doğan's technical analysis, 8,080 points is a major resistance level in the short term, and closing above this level could quickly lead to testing around the previous peak of 8,500 points. He mentioned that 7,750 points is a critical support level, and pullbacks to this level could be seen as buying opportunities.

Despite the challenges of 2023, Borsa Istanbul didn't offer poor returns, as mentioned by Aydın. He expects the index to finish the year positively, despite weakening after the Hamas-Israel conflict that began on October 7. The third-quarter financials were successful for companies, but tightening steps put pressure on profit margins. He believes the fourth-quarter financial period could be relatively calmer, with potential positive differentiations at the sector level.

Aydın also noted that the BIST 100 index's price/earnings ratio (P/E) is at 6.6, and based on 2024 earnings forecasts, the index is trading at a P/E of 4.5. This indicates that the BIST 100 index is trading at about a 60% discount compared to its peers. Aydın highlighted that policy interest rate cuts to 40% are creating upward pressure on credit and deposit rates. Despite this, he stressed that a predictable policy and the level of risk premium create a promising environment for the stock market.

Looking ahead to 2024, Aydın believes that a more predictable monetary policy, balanced inflation expectations, and reduced political uncertainty will make Turkey's market attractive to foreign investors. He expects 2024 to offer real returns, though perhaps not as high as the last two years. Aydın prefers the banking, food production, food retail, and telecommunications sectors for 2024 and suggests keeping an eye on long-term investment opportunities in the aviation and energy sectors for 2024 and 2025.