İMKB head says capital markets in need of urgent consolidation

İMKB head says capital markets in need of urgent consolidation

İstanbul Stock Exchange President İbrahim Turhan addresses reporters at a press conference at the exchange’s headquarters in İstanbul on Monday. (Photo: Today's Zaman)

May 21, 2012, Monday/ 17:15:00/ TODAY'S ZAMAN

İstanbul Stock Exchange (İMKB) President İbrahim Turhan has said it is of utmost importance for capital markets to be consolidated in Turkey.

Speaking at a press conference at the İMKB headquarters in İstanbul on Monday, Turhan noted related steps should be taken sooner rather than later to that end. “It carries substantial importance for the İMKB, the Turkish Derivatives Exchange [VOB] and the İstanbul Gold Exchange [İAB] and other exchanges that may be established in the future to be provided to investors from a common trading platform, a common access point and swap and storage system and a common regulatory framework,” he said, adding that the İMKB board does not have the authority to make this happen. “Yet our duty is to tell the truth,” he noted.

His words come at a time when the Justice and Development Party (AK Party) government has a particular agenda to make İstanbul an international financial center and is already considering ideas to implement to help this goal turn into a reality, preferably before the centennial of the modern Turkish Republic in 2023. Observers mostly agree that a legal framework must be readied beforehand, and the country's tax code must be clarified for this target.

While steps related to improving the legal framework and the tax code have yet to be taken, the government has raised some ideas to move the headquarters of the country's largest public banks as well as the Central Bank of Turkey to İstanbul. According to those ideas, the city's new financial quarter will be established in Ataşehir, on the Anatolian side, which will also host the new İMKB headquarters.

Turhan, however, fell short of lending outright support to moving the İMKB from its current location in İstinye's Poligon neighborhood to Ataşehir. “There are certain advantages for the İMKB to stay here, but we can also discuss the prospect of a transfer to the financial center planned to be established in Ataşehir,” he said.

Turhan's İMKB today has 127 of the largest 1,000 companies of the country listed. Noting how small that number is for the stock market of a country that aspires to become one of the 10 largest economies of the world and to have an international financial center at its heart by 2023, he said there is therefore a long road to travel. Turhan's intention is to bring the total market capitalization of İMKB companies up to 80 percent of the country's gross domestic product (GDP), or by some $1 trillion in a few years from the current $250 billion. And to do that, his team should convince more of Turkey's largest corporations to go public. The ultimate goal is to make the stock market the most powerful of its kind in this vast region, stretching from the Turkic republics of Central Asia to the Middle East and the southernmost tip of Africa.

Previously a vice president at the Central Bank of Turkey, Turhan, age 44, was appointed to his current position at the beginning of this year. Another task of the newly appointed İMKB head is to correct a common perception of the İMKB in the eyes of the public.

The İMKB has long been the focus of criticism from individual and small investors as certain shares have, from time to time, moved contrary to most expectations. A lawsuit in which 131 people were taken into custody in 2006 for manipulating İMKB stocks is still continuing in the İstanbul 4th High Criminal Court, but other similar allegations have so far not been sufficiently investigated.

$9.5 trillion investor club to visit Turkey

On Monday, Turhan also told reporters present at the press conference that thanks to the efforts of Deputy Prime Minister Ali Babacan, a powerful investor club -- the Russell 20-20 Association -- has been contacted and is to be hosted in Turkey in a few months for its members to seek investment opportunities in Turkey. “This group is composed of 37 institutional investors, and the total volume of the funds they manage is $9.5 trillion. They are going to come to and have a meeting in Turkey in the spring, making contacts with our companies. On Mr. Babacan's orders, we are going to take this group of investors not just to İstanbul and Ankara but also to Gaziantep to make a better contribution to Turkey's image in their minds,” he said.

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