Turkey has been hit hard by global recession, contracting by 4.7% in 2009, while unemployment levels hit an all-time-high of 16%. Yet Turkey has weathered the worst of the global recession, and is likely to approach pre-crisis growth levels in 2010. Indeed, the Turkish economy signaled the end of the recession in 4Q, registering a handsome 6% growth.

Given the fact that a handful of countries are raising rates, while others set aside monetary tightening for 3Q10, or are still pushing for a stimulus to support growth, we maintain our initial view that the CBT is unlikely to shift policy until early 2H10. We expect a rate hike totaling 150 bps in the second half of this year.

We stick to the annual strategy outlined in our annual report and remain positive on the Turkish bourse with our 5% growth outlook without IMF funding. Despite the strong performance of the stock market (up by 16% since the beginning of March, by 13% since year-end), Turkish equities are likely to test new highs in April. We believe that the CBT tightening is likely to put a temporary cap on the market's strong performance in 2H10.

The ISE index may exceed 60,000 during the month but faster than expected economic recovery may lead to earlier monetary policy response, which may in turn trigger profit taking at around the 60,000 index level. Our portfolio recommendation for the month is a mixture of defensive and cyclical names.

Since the start of the year, the Ata Research Index has returned 18.9% in absolute terms, outperforming the benchmark ISE-100 by some 6.1%. We have removed T.S.K.B. , Asya Bank , Tupras , Pinar Et and Vestel White Goods from our top recommendation list, while including Is Bank< ISCTR TI>.

Overview of 4Q09 & Full Year 2009... Broadly in line with our estimates, banks closed 2009 on a massive 51% earnings growth. The easing cycle boosted margins and trading gains, while year-end NPL ratio remained slightly below expectations. In the absence of FX and inventory losses, non-financials were able to achieve 18% earnings growth, despite 10% top line contraction.

We wanted to bring some names in the spotlight that are currently not within our coverage universe but have drawn attention with their FY09 performances. Companies covered in this report are;Ulker Gda , Aksa , Kerevitas , Kutahya Porselen , Mardin Cimento , and Ayen Enerji . 

Source Bne www.businessneweurope.eu