Goldman Says Key Istanbul Vote to Have Positive Impact on Lira

A pedestrian passes an electoral poster displaying Republican People's Party (CHP) candidate Ekrem Imamoglu in Istanbul on March 25.Photographer: Yasin Akgul/AFP/Getty Images
A pedestrian passes an electoral poster displaying Republican People's Party (CHP) candidate Ekrem Imamoglu in Istanbul on March 25.Photographer: Yasin Akgul/AFP/Getty Images
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Goldman Says Key Istanbul Vote to Have Positive Impact on Lira

A pedestrian passes an electoral poster displaying Republican People's Party (CHP) candidate Ekrem Imamoglu in Istanbul on March 25.Photographer: Yasin Akgul/AFP/Getty Images
A pedestrian passes an electoral poster displaying Republican People's Party (CHP) candidate Ekrem Imamoglu in Istanbul on March 25.Photographer: Yasin Akgul/AFP/Getty Images

Goldman Sachs Group Inc. analysts believe that the high-stakes municipal vote in Istanbul on Sunday will have a positive impact on the Turkish lira, amid increased pressure on the currency because of revived demand for hard currency this month.

The race in Istanbul, the nation’s most affluent city, is watched closely by markets and investors because it’s symbolic of a broader political battle between the opposition and President Recep Tayyip Erdogan.

“It should be positive for the Turkish lira, provided that the results are not contested in Istanbul or in other major cities,” said the analysts led by Kevin Daly. The Istanbul election in 2019 was challenged by the ruling AK Party and the vote was repeated. Incumbent Mayor Ekrem Imamoglu, viewed as Erdogan’s most formidable political opponent, won at the time. He’s seeking to maintain his seat in Sunday’s vote, according to Bloomberg.

Turkish locals have flocked to hard currency this month on concerns that the lira could face a sharp depreciation after the vote, causing a drain in the central bank’s FX war chest. A worse-than expected inflation print last month also contributed to pressure on the currency, which has lost 9% of its value against the dollar so far this year.

While Türkiye is prone to policy swings, Goldman analysts don’t think the election outcome will cause a shift in the current monetary and fiscal policies. They expect pressure on reserves and the lira to subside after the vote and see the central bank maintaining tight policy.

The Turkish central bank’s unexpected 500bps rate hike that lifted the benchmark to 50% last week “sends a strong signal that such a devaluation is unlikely,” said the Wall Street bank.



Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
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Revenue Growth, Improved Operational Efficiency Boost Profitability of Saudi Telecom Companies

A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)
A man monitors the movement of stocks on the Saudi Tadawul index. (AFP)

Telecommunications companies listed on the Saudi Stock Exchange (Tadawul) achieved a 12.46 percent growth in their net profits, which reached SAR 4.07 billion ($1.09 billion) during the second quarter of 2024, compared to SAR 3.62 billion ($965 million) during the same period last year.

They also recorded a 4.76 percent growth in revenues during the same quarter, after achieving sales worth more than SAR 26.18 billion ($7 billion), compared to SAR 24.99 billion ($6.66 billion) in the same quarter of 2023.

The growth in the revenues and net profitability is the result of several factors, including the increase in sales volume and revenues, especially in the business sector and fifth generation services, as well as the decrease in operating expenses and the focus on improving operational efficiency, controlling costs, and moving towards investment in infrastructure.

The sector comprises four companies, three of which conclude their fiscal year in December: Saudi Telecom Company (STC), Mobily, and Zain Saudi Arabia. The fiscal year of Etihad Atheeb Telecommunications Company (GO) ends on March 31.

According to its financial results announced on Tadawul, Etihad Etisalat Company (Mobily) achieved a 33 percent growth rate of profits, bringing its profits to SAR 661 million by the end of the second quarter of 2024, compared to SAR 497 million during the same period in 2023. The company also achieved a 4.59 percent growth in revenues to reach SAR 4.47 billion, compared to SAR 4.27 billion in the same quarter of last year.

The Saudi Telecom Company achieved the highest net profits among the sector’s companies, at about SAR 3.304 billion in the second quarter of 2024, compared to SAR 3.008 billion in the same quarter of 2023. The company registered a growth of 4.52 percent in revenues.

On the other hand, the revenues of the Saudi Mobile Telecommunications Company (Zain Saudi Arabia) increased by about 6.69 percent, as it recorded SAR 2.55 billion during the second quarter of 2024, compared to SAR 2.39 billion in the same period last year.

Commenting on the quarterly results of the sector’s companies, and the varying net profits, the head of asset management at Rassanah Capital, Thamer Al-Saeed, told Asharq Al-Awsat that the Saudi Telecom Company remains the sector leader in terms of customer base expansion.

He also noted the continued efforts of Mobily and Zain to offer many diverse products and other services.

Financial advisor at the Arab Trader Mohammed Al-Maymouni said the financial results of telecom sector companies have maintained a steady growth, up to 12 percent, adding that Mobily witnessed strong progress compared to the rest of the companies, despite the great competition which affected its revenues.

He added that Zain was moving at a good pace and its revenues have improved during the second quarter of 2024. However, its profits were affected by an increase in the financing cost by SAR 26.5 million riyals and a rise in interest, while net income declined significantly compared to the previous year, during which the company made exceptional returns.