Turkish construction shares surge amid Syria rebuilding hopes

Reuters

Shares in Turkish construction and cement companies surged on Dec. 9, buoyed by expectations they will benefit from rebuilding in Syria after rebels overthrew President Bashar al-Assad.

Turkey will work for the reconstruction of Syria after Assad's ouster and help the Syrian migrants it hosts return home safely, Foreign Minister Hakan Fidan said.

"With the fall of the Assad regime, the reconstruction of Syria is moving forward," said Yakup Toktamış from brokerage Trive Yatırım.

Yusuf Doğan, head of global markets research at Info Yatırım, said there would be significant opportunities for Turkish companies in the construction, cement, and steel sectors.

Turkey's geographical proximity and trade relations give its companies an edge in Syria's reconstruction, Doğan added.

In a report published in February 2023, the World Bank estimated the total damage across Syria's 14 main cities and sectors at as much as $11.4 billion since the 2011 civil war started.

Analysts emphasized the difficulty in assessing Syria's reconstruction needs due to the unknown scale of destruction and uncertain political future. In addition, demand for rebuilding will depend on how many refugees dispersed worldwide return.

Big potential for Turkish companies

Volkan Bozay, CEO of the Turkish manufacturers' association TürkÇimento, representing 94 percent of the sector, highlighted the high growth potential in the cement industry.

Cement exports peaked at 1.5 million metric tons in 2015, and are currently around 900,000 tons annually, signaling room for growth as rebuilding projects progress, Bozay said.

"The potential is significant, especially with the ongoing need for infrastructure development in regions affected by conflict," Bozay said.

"Cement is a critical component for reconstruction, and the demand is expected to rise as rebuilding efforts ramp up."

However, the CEO cautioned that political instability and logistical challenges remain a concern.

“Companies located closer to these regions have a logistical advantage," Bozay noted. "While the potential is there, predicting the exact impact of these factors on the market is still difficult."

Shares in Turkey's largest construction company Enka İnşaat rose around 5.22 percent. Cement companies Bursa Çimento, Oyak Çimento, Afyon Çimento, Akcansa, Limak Doğu Anadolu Çimento jumped between 8 and 10 percent.

Bursa Çimento shares rose to their highest since May 2023 while Oyak Çimento shares hit their highest since September 2023.

Steelmaker İskenderun Demir Çelik rose nearly 10 percent and Emlak Konut, one of Turkey's largest real-estate developers, gained 2.75 percent.

Turkey's non-metal index which includes cement companies, was up 7.79 percent and hit its highest since September 2023, while the construction index rose 3.41 percent to its highest ever.

Serhat Başkurt of ALB Yatırım brokerage said Limak Doğu Anadolu Çimento and Bursa Çimento were particularly well-positioned.

Limak Doğu Anadolu Çimento, with its 3.6-million-ton production capacity, could benefit from new investments or higher clinker production, Başkurt said, also pointing to Bursa Çimento's 1.4 million-ton clinker capacity.

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