The Central Bank has started cutting interest rates from where it left off. The first phase of the discounts, which began in September and reached 5 points in 4 months, ended in December. We estimate that the target for the second phase discount, which starts at 14 percent after 8 months, is to reach a single figure. With a discount of 5 points in the first phase and 5 points in the second phase, interest rates are reduced to 9 percent.
Power well before the elections “We lowered interest rates to single digits. It is time to reduce inflation to single digits. We do it too. We have done it in the past “ can pay for itself. I don’t know how much this means in the eyes of the voters.
➔However, if the interest rate cut continues, it will have many effects on the economy and financial markets.
➔If market interest rates can be lowered and credit increased, it is clear that this will have a growth-maximizing effect. This is the main purpose of lowering the interest rate.
However, it is very clear that falling interest rates will play an increasing role in inflation. The price of an abundant commodity falls. The value of money will decrease, purchasing power will decrease, inflation will increase.
Anyone who takes ➔TL will want to get rid of it immediately. This is what happens during times of high inflation, when the currency depreciates rapidly.
HIGH PROTECTION IN THE REAL ESTATE SECTOR
➔While savings holders avoid TL, one of the two alternatives to go beyond foreign exchange and gold is real estate and the other is stocks.
The interest rate decision coincided with a period when it was announced that home sales fell in July. A 13 percent drop in sales signals the withdrawal of buyers and market stagnation.
➔The reason for the recession in the housing market is probably the very rapid increase in prices. Because it was announced on the same day. House prices rose 9 percent in June. The increase in the first half of the year was 90 percent, the latest increase in one year was 160.6 percent.
Starting the process of cutting interest rates can prevent house and property prices from losing momentum and prices from correcting.
➔After all The real estate sector offers good protection if interest rate cuts lead to inflation. It also provides more returns than all financial instruments. Low taxes, rental income. It is also easier to get out of the registry.
RECORD OF PROFIT FROM COMPANIES
➔Lots of money and low interest rates can also direct money into stocks. After all, what you buy and sell on the stock market are stocks representing companies that own real estate, machinery, manufacturing and service energy. They also distribute dividends on an annual basis.
➔ Furthermore, companies had the most profitable period of the 2000s. It was 2020-2021 and the first half of this year. The company’s earnings figures announced today point to record hikes once again.
➔With the addition of the 500 largest industries and the second top 500 industries, there is a return on equity of 1,000 industrial companies.
➔The average equity earnings of 1,000 large industrial companies last year hit an all-time record with 45%. Profitability in 2020 is still high at 27%.
➔In short, growth jumped and KGF loans were made. Industrial companies have a return on equity of over 20% in 2017 and beyond.
➔The profitability of the last few years varies between 13-17. An average return on equity of 15 is the ideal ratio for companies to maintain and grow their equity.
➔Even in the last year, the profitability of banks lending to businesses, the state and individuals has returned to normal and has exploded in the first half of 2022, which is not included in the table.
INDEX EXCEEDS 3 THOUSAND POINTS
➔There was intense demand for the shares of publicly traded banks on Tuesday and Wednesday. The volume of transactions was also high for bank shares, whose two-day premium was 11%.
➔With yesterday’s interest rate cut, it made more sense why there was strong interest in bank stocks. Because interest rate cuts also benefit banks. They will earn both from their wallet and from the sale of coins.
➔The stock market reversed 3,000 points yesterday with the rapid exit in recent weeks. On March 7, he beat over 2,000 points. It increased by 51 percent in 5.5 months. Thousands go by so fast.
➔However, looking at the dollar base, the index equivalent on March 7 was $ 1.39, while yesterday it climbed to $ 1.67. The 51% premium on a TL basis fell to 20% on a dollar basis.
➔There are many similarities between the stock market and real estate and land investments. While plentiful and cheap money brings record price increases in the housing market, the stock market is still at the bottom.
➔The dollar-based index is still at the 1.67 level. The stock market’s record level is at the $ 5.10 level.
Also, companies are experiencing their most profitable times, while plentiful and cheap money seeks a place to go, limited investment comes to the stock market.
10 BILLION DOLLARS IN 4 YEARS
➔The most important factor in this is that foreign investors sell and leave. In the process that began with the 2018 London speech, foreigners’ loans in TL were gradually limited. Few people come with cash in their pockets.
Meanwhile, political and economic developments and declining credit ratings have led long-term institutional equity investors who have come and stayed in Turkey since the 1990s to quit.
➔After all From the second half of 2018 through the end of July this year, total net sales of foreign shares over the four years were $ 9.93 billion.
➔10 billion dollars are 180 billion lire with yesterday’s exchange rate. A lot of money has been permanently withdrawn from the stock market year after year.
➔ Let’s just say the biggest release is in 2020 with $ 4.6 billion. The net outflow in the 7 months of this year was also $ 3.1 billion.
➔ Foreigners come to one market and foreigners have to flee from the other. Here is the clear answer to why the stock market is bottoming out while the real estate sector is registered.
➔ It’s not easy to manage a $ 10 billion sale. The stock market lived as the continuous drops carve the stone. It is still trying to digest $ 10 billion in sales.
OPPORTUNITY ARISING FROM THE WRONG PRICE
➔Why foreigners are not required to take an effective role in the exchange rate by borrowing TL or playing with the exchange rate. For this reason, while various incentives have been granted for entry into the real estate sector, difficulties in accessing finance for the securities have emerged.
➔It is because of the absence and flight of foreigners that real estate prices are at record highs and stock prices are at their lowest. This creates a very important investment opportunity in the stock market.
➔If foreigners come one day, prices are expected to correct and the stock market will move closer to real estate.
➔I don’t know if and when the foreigners will arrive. But the price before these elections could be very different than in past elections.