Positive Forecasts for TL and Turkish Stocks from HSBC

HSBC's Positive Outlook: TL and Turkish Equities

HSBC expressed a constructive view on the Turkish lira (TL) and Turkish equities in its latest report on Turkey. The institution noted that macroeconomic conditions are supportive; however, despite high political and geopolitical risks, strengthening policy buffers have partially balanced these risks.

Economic and Inflation Forecasts

HSBC reported that the Turkish economy demonstrated resilience despite both internal and external shocks throughout 2025. A strong growth coupled with a slower disinflation process is anticipated in 2026. The report predicts that year-end inflation will decline to around 20%, emphasizing that this decrease will lead to aggressive interest rate cuts totaling 1,150 basis points.

Exchange Rates and Market Expectations

HSBC forecasts that the dollar/TL exchange rate will be at the 48 level by year-end. This prediction indicates limited real appreciation of the currency in an environment where inflation remains above 30%. Moreover, the advice to “increase weight” in Turkish equities has been renewed, with significant valuation expected as inflation declines from its peak and interest rate cuts gain momentum.

Opportunities in the Banking Sector

In HSBC's report, it is projected that falling interest rates will support a strong recovery in equity valuations by reducing Turkey's cost of equity. Additionally, it is noted that Turkish equities are trading at historically low levels compared to emerging markets.

The Importance of Strategic Location

The report states that Turkey's strategic location has not yet been fully priced in by the market. It highlights that Turkey could play a key role in reconstruction in regions such as Syria, Gaza, Ukraine, and Lebanon, which may present positive surprises for the cement, industrial, and energy sectors.

The information provided here is for informational purposes only and does not constitute investment advice.