OPPORTUNITIES IN TURKISH CAPITAL MARKETS
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Transcript of OPPORTUNITIES IN TURKISH CAPITAL MARKETS
OPPORTUNITIES IN TURKISH CAPITAL MARKETS
Hüseyin ERKANChairman & CEO
Istanbul Stock Exchange (ISE)
The 3rd Turkish-Arab Economic ForumJune 12-13, 2008, Istanbul
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Turkey: Gateway to Europe, Asia and the Middle East
Turkish economy has a growing potential in different sectors Property projects Telecommunication & Technology Infrastructure Projects (utilities, ports, highways)
Turkey stands to be a corridor in the middle of the GCC countries, Europe and Asia
Net FDI to Turkey in 2006-2007 is US$ 20 billion in each year (1/3 of the net FDI comes through the ISE)
The Turkish capital markets are highly liquid and appeal to foreign investors (high level of investor confidence)
Enhanced market infrastructure Legal framework in harmony with the international standards Technological infrastructure is strong and competitive
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Improving Macroeconomic Indicators
A stable political and economic outlook
Appropriate business environment for both FDI and portfolio investments
Successful privatization programs
Harmonization with the EU countries
Efficient banking and capital market system
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Investment Opportunities in Turkey
Investors' Preference What Turkey Offers
A well-developed banking sector 46 local commercial and investment banks
4 participation banks
Free movement of funds
Investment-friendly policies 100 % foreign ownership allowed
Tax treaties with 86 countries
Booming property market
Profitable investment opportunities Development of the energy industry for the region
Growing need for infrastructure development
Project financing for fast growing companies
World's 5th largest bond market
A wide-range of capital market investment ETF market is growing
instruments New regulations for structured warrants and
asset backed securities are on the way
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ISE’s Experience
Coordinator of the “OIC Member States Stock Exchanges Forum’’
President of the “Federation of Euro-Asian Stock Exchanges” (FEAS)
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ISE’s ExperienceRelations with the OIC Member Countries
57 Member States57 Member States31 Stock Exchanges31 Stock Exchanges8 Observers8 Observers
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OIC Member States Stock Exchanges Forum
OIC Member States Stock Exchanges Forum
(the first meeting was held on March 2005 in Istanbul) Aim: To promote cooperation among the stock
exchanges of the OIC Member States.
Out of 57 OIC Member States, only 38 of them have functioning stock exchanges. 16 out of 38 countries are the members of FEAS.
Working Committees (Technical & IT Committee)
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OIC Member States Stock Exchanges Forum(Proposals)
The definition and certification of the securities
Creation of regional market indices
Cooperation among regulatory bodies and other capital market institutions (i.e. clearing, custody institutions)
Cooperation with the existing federations
Organizing joint training and staff exchange programs
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Working Committees
Technical Committee (consists of 11 members) Creating Common Indices Promoting the creation of Islamic Depository Receipts (IDR) Cross-listing and Cross-membership Opportunities Exchanging Staff and Organizing Training Programs Defining Areas of Cooperation (i.e. Common trading platform) Questionnaire – Surveys for the assessment of the stock
exchanges
IT Committee (consists of 8 members) Assessment of technological levels of the participating stock
exchanges Establishment of a Data Center
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ALBANIA AZERBAIJAN (2) ARMENIA BAHRAIN BELARUS BOSNIA
HERZEGOVINA (2)
BULGARIACROATIA EGYPT GEORGIA IRAN IRAQ
JORDAN KAZAKHSTAN KYRGYZ REPUBLIC MACEDONIA MOLDOVA MONGOLIA
OMAN PAKISTAN (2) PALESTINE ROMANIA SERBIA MONTENEGRO
TURKMENISTAN TURKEY UKRAINE UNITED ARAB EMIRATES UZBEKISTAN
MEMBER EXCHANGESMEMBER EXCHANGES
29 Countries29 Countries32 Member 32 Member ExchangesExchanges8 A8 Affiliate ffiliate MMembersembers
FEAS - FEDERATION OF EURO-ASIAN STOCK EXCHANGES
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How FEAS Serves to the Needs of Member Stock Exchanges ?
Promotes mechanisms for reliable, transparent and continuous trading and settlement
Creates greater awareness and visibility for the regions stocks and investment opportunities
Helps to promote the listing of home market investment grade companies in the regional market and encourages them to get involved in regional indexes (i.e. Dow Jones)
Provides network and updated information to the new members at the region, with meetings, web applications & publications (with the joint work of FEAS, ISE and OECD) “Best Practices for the Development of Stock Exchanges in
Transition Economises” “SME Financing: Alternative Sources of Finance”
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How FEAS Serves to the Needs of Member Stock Exchanges ?
Helps create linkages among: The regions’ intermediaries The regions’ data providers The regions’ settlement and custody institutions
Creates a centeralized training hub for FEAS members in order to encourage research and regulatory implementation via bilateral exchange program
Promote Corporate Governance
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FEAS Region Statistics
Statistical Comparison / FEAS Region 2004 2005 2006 2007
Number of Companies Traded 8.003 8.348 9.057 9.498
Market Capitalization (US$ Millions) 377.280 638.041 690.455 1.065.337
Total Volume (US$ Millions - Stocks) 273.616 467.903 505.163 615.733
Total Volume (US$ Millions - Bonds) 314.833 429.311 380.662 478.517
Source: FEAS
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Istanbul: A City with an International Financial Center Potential
Financial centers
Potential candidates
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ISE’s Market Performance
Stock Market2007
(USD Billion)2001
(USD Billion)
Number of Intermediaries 104 intermediaries 126 intermediariesNumber of Companies Traded 319 Companies 310 CompaniesTotal Market Capitalization 290 48Daily Average Trading Value 1,2 0,3Total Trading Value 300,8 80,4 Bonds and Bills Market
Daily Average Trading Value 9,1 2,6Daily Average OTC Trading Value 2,2 3,3Total Trading Value 2.831,1 1.517,4
Total Daily Average Trading Value 12,5 6,2Total Markets Trading Value 3.131,9 1.597,8
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Istanbul attracts and appeal to Major International Financial Institutions
Investment Banks that Bought Intermediary Institutions in Turkey
Buyer Seller New Name
Citigroup Opus Menkul Citi Menkul DeğerlerDeutsche Group Bender Menkul Deutsche MenkulMerrill Lynch Tat Menkul Merrill Lynch MenkulMorgan Stanley Arıgil Menkul Morgan StanleyLehman Brothers MNG Menkul Lehman BrothersCredit Suisse Baran Menkul Credit Suisse MenkulUBS Arı Menkul UBS Menkul DeğerlerBGC Holdings As Menkul BGC Partners MenkulEFG Eurobank HC İstanbul Menkul EFG İstanbul MenkulCredit Agricole Cheuvreux Form Menkul Credit Agricole CheuvreuxOrion Holding Overseas İktisat Menkul Orion InvestmentUnicorn Investment Bank Inter Yatırım Unicorn Capital
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Market Capitalization (Billion USD)
Source: WFE, S&P
Arabic Countries Average; 148
Turkey; 287
0 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000
BermudaSri LankaMauritiusSlovakia
IranHungary
ArgentinaPeru
ColombiaPhilippinnes
EygptArabic
ThailandPoland
IndonesiaChileIsrael
TurkeyMalaysia
MexicoTaiwan
China-She.S.Africa
KoreaBrasil
India N.S.EIndia-Bombay
China-Sha.
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Market Traded Value (Billion USD)
Source: WFE, S&P
Arabic Countries Average; 121
Turkey; 296
0 500 1.000 1.500 2.000 2.500 3.000 3.500 4.000 4.500
SlovakiaArgentina
IranPeru
ColombiaPhilippinnes
HungaryChile
EygptPoland
IsraelIndonesiaThailand
ArabicMexico
MalaysiaTurkey
India-BombayS.Africa
BrasilIndias N.S.E
TaiwanKorea
China-ShenzenChina-Shanghai
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Number of Listed Companies
Source: WFE, S&P
Arabic Countries Average; 149
Turkey; 319
0 1.000 2.000 3.000 4.000 5.000
HungaryBermudaMauritiusSlovakia
ColombiaArgentina
ArabicPeru
Sri LankaChile
PhilippinnesTurkey
IranMexicoPoland
IndonesiaBrasil
S.AfricaEygpt
ThailandIsrael
China-She.Taiwan
China-Sha.Malaysia
IndiasKorea
India-Bom.
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Arab Countries’ Stock Market Capitalization(2005-2007, Billion USD)
1.266
866
1.331
400
500
600
700
800
900
1000
1100
1200
1300
1400
2005 2006 2007
Source: Standard & Poors
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0
50.000
100.000
150.000
200.000
250.000
300.000
2007
2006
2005
Arabic Countries Average Turkey
Market Capitalization (Million USD)Arabic Countries Average vs. Turkey
Source: S & P
76,4%
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0
50.000
100.000
150.000
200.000
250.000
300.000
350.000
2007
2006
2005
Arabic Countries Average Turkey
Market Traded Value (Million USD)Arabic Countries Average vs. Turkey
Source: S & P
33%
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Comparison of Bonds & Bills Markets Traded Value (2007, billion USD)
Source: WFE
Istanbul SE; 479,89
0 1.000 2.000 3.000 4.000 5.000 6.000
Australian SEBursa Malaysia
Tokyo SEShenzhen SE
Cairo & Alexandria SEsTSX Group 1
Singapore Exchange 3Shanghai SE
Irish SEBuenos Aires SE
#N/AOslo Børs
Santiago SESw iss Exchange
Euronext Tel Aviv SE
Borsa ItalianaDeutsche Börse
Korea Exchange 2Istanbul SE
Colombia SEOMX Nordic Exchange
London SEBME Spanish
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Index Returns(2007/12, USD based)
Source: WFE
72%
0%
20%
40%
60%
80%
100%
120%
140%
160%
180%
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25
ISE National 100 Index(USD based)
Source: ISE
0
500
1,000
1,500
2,000
2,500
3,000
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
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19
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19
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19
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20
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20
03
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/5
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Comparison of ISE-100 with MSCI Indices (2005/6=100 USD based)
Source: Bloomberg, Morgan Stanley
0
50
100
150
200
250Ju
n-0
5Ju
l-05
Aug
-05
Sep
-05
Oct
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Nov
-05
Dec
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Jan
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Feb
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Mar
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Apr
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May
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Nov
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Dec
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Jan
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Feb
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Mar
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Apr
-08
May
-08
MSCI Developed MSCI EmergingMSCI ARABIAN COUNTRIES ISE National-100
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P/E Ratios
Source: Bloomberg
12,414,2
13,210,1
13,513,8
13,710,5
15,117,0
15,514,8
16,016,516,8
15,517,3
7,517,4
15,317,5
14,120,1
14,720,3
15,028,0
19,018,616,4
0,0 5,0 10,0 15,0 20,0 25,0 30,0
S.Africa
Hungary
Russia
Poland
Brasil
M exico
M SCI World
Czech Rep.
Turkey
M SCI Emerging
Korea
Thailand
Argentina
India
M SCI Arabian Countries
30.05.2008
31.12.2007
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Foreign Participation in the IPOs
Total Revenue (Million USD)
Foreign Participation (Million USD)
Foreign Participation(%)
1998 383.35 280.96 73%
1999 90.72 10.06 11%
2000 2,806.22 1,930.01 69%
2001 0.24 0.02 8%
2002 53.95 20.63 38%
2003 11.37 - 0%
2004 482.58 181.61 38%
2005 1,743.96 1,284.05 74%
2006 930.50 579.36 62%
2007 3,298.31 2,019.57 61%
2008/5 1,900.00 1,150.00 61%
Foreign participation in IPOs is about 66% on average in the last 3 years
Source: ISE
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Foreign Participation in the ISE Stock Market(as of % of free float market capitalization)
54.7%54.3%63.9%
40.9%49.2%
43.0%
52.2%
57.0%66.3%65.3%
72.4%70.20%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008/5
Source: CRA
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Regional Cooperation
New joint financial instuments may be developed Creation of regional indices, ETFs
The regional countries may further cooperate to enhance common standards in their capital markets The 2nd OIC Member States Stock Exchanges Forum
that will be held in Istanbul by the ISE on 18-19 October, 2008 may offer a valuable opportunity
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Future Prospect
Favorable oil market conditions are likely to persist in near term
Arabic countries’ capital markets have stabilized and will begin attracting new foreign investment
Turkish capital markets provide attractive prospects for the Arab countries’ individual and institutional investors.