Capital Markets
From The Report: Turkey 2013
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Following the 2012 enactment of the new capital markets law, the Istanbul Stock exchange was merged with the Istanbul Gold Exchange and renamed Borsa Istanbul. Following a dismal performance in 2011, equity markets staged a dramatic recovery in 2012, with the dollar-based version of the Borsa Istanbul’s broadest index, the BIST 100, coming within 4% of its record high in January 2013. The government’s commitment to promoting capital markets and its generally practical approach bode well for the sector’s development. Although its ambition to develop Istanbul into one of the world’s top financial centres is lofty, the project is proving to be a positive catalyst for down-to-earth reforms that will be useful in the near term to strengthen markets.
This chapter contains interviews with Vahdettin Ertaş, Chairman, Capital Markets Board (CMB); Ibrahim Turhan, Chairman and CEO, Borsa Istanbul; and Özgür Günerı, CEO, Finansinvest.
Articles from this Chapter
The next stage: The bourse turns in a strong performance in 2012 as efforts to broaden and deepen the market continue
Stepping into the limelight: OBG talks to Vahdettin Ertaş, Chairman, Capital Markets Board (CMB)OBGplus
Interview: Vahdettin Ertaş What key issues were addressed by the recent amendments to Turkey’s capital markets laws (CML)? VAHDETTIN ERTAŞ: The most important changes in the new CML reflect Turkey’s harmonisation process with capital markets regulations in the EU and the lessons derived from the recent global financial crisis. One of the biggest changes was in corporate governance. Starting this year, banks and listed firms are required to follow new rules that define the responsibilities…
Encouraging investment: OBG talks to İbrahim Turhan, Chairman and CEO, Borsa İstanbul (BIST)OBGplus
Interview: Ibrahim Turhan What impact is Turkey’s credit rating upgrade likely to have on investment activity on the BIST over the short to medium term? IBRAHIM TURHAN: Many analysts have deemed Turkey an investment grade country for several years, especially since 2010. Since that year, the lira has been one of the least volatile emerging markets currencies and real interest rates have fallen to historic lows. These developments, along with Republic’s robust growth record and sound policy…
Aiming high: The government works to develop Istanbul as a global financial centreOBGplus
Recep Tayyip Erdoğan, the prime minister of Turkey, has an expansive vision of the future of the country’s capital markets. In an April 2013 speech opening the first session of Borsa Istanbul under its new name, he said that the exchange’s restructuring would “reinforce Istanbul’s bid to be a finance centre just like New York, Tokyo and London”. Political Support Promoting Istanbul’s potential as a financial centre has become a prominent part of Erdoğan’s and his party’s policy…
Özgür Güneri, CEO, Finansinvest, on the markets’ inflection pointOBGplus
Previous examples show that the development of capital markets goes hand-in-hand with economic prosperity. Although wealth accumulation is a prerequisite for capital markets growth, alone it is insufficient. A stable macro environment and well-functioning market structure are also needed. We believe Turkey’s capital markets are at an inflection point, and expect them to be driven by tailwinds in the coming years. Turkey has taken huge steps to reduce its macro vulnerabilities in the last decade.…
New directions: The growing popularity of Islamic bondsOBGplus
The Islamic finance sector in Turkey received a powerful boost in 2012 as the government entered the market with its debut issues of sukuks, the Islamic equivalent of bonds. The successful debuts – one in the domestic market and another in the international Eurobond market – have set the stage for an expected boom in the issuance of sukuks by the government, state-owned companies, the construction industry and Islamic financial institutions. The government’s entry into Islamic finance as an…
Modern times: Legal changes and product introductions herald a new eraOBGplus
In line with the country’s rising profile as a destination for emerging market investment, Turkey’s capital markets are undergoing a major modernisation. A combination of legal reforms, an expansion of local exchange offerings into more complex instruments, and technological and procedural improvements to facilitate electronic and algorithmic trading are laying the groundwork for future growth. Legal Reforms Two major legal reforms with a direct impact on capital markets have been adopted…
Making the grade: An upgrade by one of the major ratings agencies spurs capital inflowsOBGplus
On November 5, 2012, Turkey’s financial industry finally received the news that it had been waiting for all year. Fitch, the international ratings agency, had upgraded Turkey’s sovereign credit rating to BBB-, the lowest level within the coveted category known as investment grade. The upgrade had been widely anticipated, but even so it proved to be a powerful trigger. Turkish Eurobonds rallied hard for the rest of November and into December, pushing yields on benchmark 10-year lira bonds, which…
Aygaz: EnergyOBGplus
The Company Aygaz, founded in 1961 and listed on the Istanbul Stock Exchange (now Borsa Istanbul) in 1990, is the market leader in liquefied petroleum gas (LPG) distribution in Turkey, with a sales volume of 1.7m tonnes and $3.2bn in revenues in 2012. Serving some 5m households and possessing a fleet of 250,000 vehicles, Aygaz is the fifth-largest LPG distribution company in Europe. Aygaz has a market share of 43% in the LPG canister market and a 23% share in auto-LPG sales, corresponding to an overall market share of 28%. The company has a fixed storage capacity of 170,000 cu metres across 26 facilities in Turkey, and a moving storage capacity…
Garanti Bank: BankingOBGplus
The Company Garanti Bank operates in every segment of the banking sector, including corporate, commercial, small and medium-sized entity (SME), retail, and private and investment banking. The company provides a wide range of financial services to its more than 11m customers through an extensive distribution network of 933 domestic branches. Garanti Bank is jointly controlled by Doğuş Holding and Banco Bilbao Vizcaya Argentaria (BBVA), under the principle of equal partnership, and 50.8% of Garanti Bank shares are on free float. Garanti Bank boasts one of the highest return on average assets (RoAA) levels in the industry, as the bank benefits…
Alarko: DiversifiedOBGplus
The Company Alarko was founded in the 1950s by the Alaton and Garih families as a manufacturer of heating, cooling and air conditioning systems. The two families currently hold 35% and 34% stakes in the company, respectively, and the free float rate stands at 26%. While the contracting business was the focus of the company for several decades, the contribution of the energy segment has grown, and now comprises more than 50% of total revenues, thanks to the acquisition of the Meram distribution grid in October 2009. The contracting segment generated 29% of total sales during the first three quarters of 2012. The company operates in four…
Anadolu Efes: BeveragesOBGplus
The Company Anadolu Efes is the leading producer of beer in Turkey. Together with its 100%-owned subsidiary, Efes Breweries International (EBI), the company operates in Russia, Kazakhstan, Moldova, Georgia and Ukraine. The company also holds a 50.3% stake in Coca Cola İçecek (CCI), one of the leading bottlers in the Coca-Cola system. Along with Turkey, CCI operates in the Middle East, the Commonwealth of Independent States and Pakistan. As of September 2012, the company commanded an 84% market share in Turkey. At the time, Turkey’s beer consumption had been stagnant for the preceding three years, mainly as a result of the holy month…
IST30: Exchange-traded fundOBGplus
Composition IST30 is the first exchange-traded fund (ETF) based on the BIST 30 National Index (BIST 30) in Turkey. An ETF is an investment vehicle that combines key features of traditional mutual funds and individual stocks. ETFs represent a variety of securities that track specific indexes, like index mutual funds, but they can be traded on the same trading day. IST30 makes it easy to invest in equities on the BIST 30, which is made up of the largest 30 companies on the Borsa Istanbul by market capitalisation. Buying and selling at the market price, investors can save time and costs, since IST30 can be traded on the exchange just like…
FBIST: Exchange-traded fundOBGplus
Composition The FTSE Istanbul Bond (FBIST) exchange-traded fund (ETF) is the first ETF to track the FTSE Turkish lira government bond index. It provides investors with exposure to a basket of Turkish fixed-income securities with a single transaction. The FTSE index consists of fixed-income securities with a maturity of over 180 days and a minimum nominal size of TL1bn (€432m), including both straight-bullet bonds and zero-coupon bonds. The index is rebalanced monthly, with bonds removed when their maturities fall below six months, and new issues are included once a month after the close of the last business day. FBIST allows investors to…
