On Monday the İMKB-100 benchmark index closed the day of trading at 58,644, an all-time record and a sign that Turkey’s capital markets have put the global financial crisis well behind them.
Not all is carefree for traders, however, as the fear of restrictive regulation as the markets heat up is ever-present given similar moves by other developed nations after the financial crisis.
Capital Markets Board (SPK) President Vedat Akgiray, in a magazine article published yesterday, regarding possible regulations that could limit capital market activity, said: “If we give a reason for money to flee [from the stock market] then it will flee. There is no way you can stop this from happening with rules or regulations when taking into account the technology available today.” He added that any regulation coming out of the SPK must therefore not disturb the flow of funds into the markets.
“This means that such regulations needs to be light-handed and less of a deterrent -- they need to be clearly understood. Protecting markets means protecting investors as well as the business world,” stated Akgiray. He said regulations that may threaten investors’ shares in companies would not be in any way productive and that no technological or regulatory tool could stop investors from pulling their money out of Turkey’s capital markets. “It’s like the YouTube ban. There’s no way you can [stop people from watching]. We need to accept this.”
Regarding the potential of Turkey’s capital markets, Akgiray said they had not developed as much as “they should.” He stated that the value of all public firms in Turkey as a share of gross domestic product (GDP) was one of the lowest out of developed nations as well as many developing nations. He stated that this was “unacceptable” and said the İMKB’s “IPO Campaign” hopes to bring smaller firms into the stock market.
Moreover, the value of trade realized on the İMKB made by foreigners has more than doubled in the span of a year, as Turkey’s capital markets look increasingly attractive to investors abroad.
According to data from the İMKB, foreign investors traded a total of $10.1 billion in shares in March, a 124.7 percent increase from the same month of last year. Foreigners investing in the İMKB bought a total of $5.35 billion worth of shares in March, a 138.7 percent increase from the previous year’s March. The amount of shares sold by foreigners was $5.5 billion, a 110.9 percent increase over the same period, for a net $576 million in shares bought, a stark contrast to the net $22 million in sales last March.
This trend is not new, however, as this same year-on-year increase in shares bought was 146 percent for January and a staggering 202 percent for February. In terms of sales, these figures increased by 124 percent in January and 156.2 percent in February. The figures show that foreign investors are looking at the İMKB as a safe bet for their capital investments, and are more confident in the stability of its economy.
The total volume of trades by foreigners was $10.1 billion in March, a 124.7 percent increase over a year before. This figure was 134 percent for January and 176.5 percent for February.