BIST 100 (TURKEY) and INDUSTRIAL SECTOR

From politics to its financial markets and its currency, news flow on Turkey has been negative. Can the financial markets in Turkey return to stability?  I’d like to draw attention to an interesting correlation between BIST 100  and the relative performance ratio between Industrial sector and BIST 100 index. Relative performance ratio is calculated by dividing the Industrial index (XUSIN) to BIST 100.

Few findings:

1) Correction periods on the BIST 100 index resulted in outperformance for the Industrials and undeperformance for the Financials.

2) Since 2004, 0.93-0.95 area acted as strong resistance for the relative performance ratio between XUIND/XU100.

Few conclusions:

1) As the relative performance ratio reached strong resistance area, we are likely to see a change in trend favoring financials.

2) Change in sector performance (Underperform: Industrials, Outperform: Financials) could have a positive effect on the BIST 100 index.

We are at the early stages of this development and we should wait for the initial reaction (confirmation) on both the relative performance ratio and the BIST100 index.