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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT APRIL 2007
ISTANBUL STOCK EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Economic and Political Environment
Turkey has significantly improved its
macroeconomic situation by the decisive
implementation of a comprehensive economic
program with the backing of a single party
government. The policy combination followed
since 2002, based on tight fiscal and monetary
policies and a flexible exchange rate regime
have led to an outstanding improvement in
key economic variables. Structural reforms in
financial markets together with a radical
progress in policy framework and institutional
advancement paved the way to sustainable
high growth which enhanced prospects for
Turkey’s eventual membership to the European
Union (EU).
Turkey has implemented a range of economic,
political and social reforms in an effort to meet
EU requirements. The ongoing process of EU
accession and the signing of a new Stand-By
arrangement with the IMF covering the period
of 2005-2008 have created two strong anchors
for increasing Turkey’s growth potential and
improving a better functioning market economy.
As a result of the EU pre-accesion process,
Turkey’s economic legislation has been
progressively aligned with the main policies and
standarts of the EU which further strengthened
the macroeconomic environment.
The recently achieved macroeconomic stability
and strong fiscal performance have improved
confidence in the economy and contributed to
maintain high growth rates in the consecutive
four years. The annual growth rate averaged
8%.
As a result of take-overs, mergers and
acquisitions, some of the ISE member
brokerage houses and banks as well as ISE
traded companies were bought by foreign
investors. Consequently, the share of foreign
banks in the Turkish banking sector increased.
Economic Performance
Following the GNP growth rate of 7.6%
achieved in 2005, the Turkish economy grew by
6.4%, 8.5% and 3.0% respectively in the first,
second and third quarters of 2006. The growth
was mainly driven by the construction sector
which grew by 20.1% in the first nine months of
2006. On the expenditures side, private sector
consumption and investment expenditures
made the highest contribution to growth.
By the end of October 2006, exports and
imports reached US$ 67.8 billion and
US$ 112.3 billion, respectively, exports
registering an increase of 12.5% and imports
registering an increase of 17.7% compared
to the January-October period of 2005.
Accordingly, the rate of imports covered by
exports stood at 60.4% as of end October
2006.
The year-on-year consumer price index
increased to 9.86% as of end November
2006, from 7.61% as of end November 2005.
The year-on-year producer price index
increased to 11.67% as of end November
2006, from 1.60% as of end November 2005.
The consolidated budget registered a deficit of
YTL 3.8 billion as of the end of October 2006
bringing the year to date primary surplus to
YTL 37.1 billion. Total revenues increased by
31.9% to YTL 140.5 billion and total
expenditures increased by 24.5% to YTL 144.3
billion as of the end of October 2006 compared
to the same period of 2005. Thus, the
consolidated budget deficit was realized at
YTL 9.4 billion, while the consolidated primary
surplus was YTL 29.4 billion for the January-
October period in 2005.
As of the end of 2006, the ISE-National 100
Index, the main stock market index on the
Istanbul Stock Exchange (ISE), decreased by
1.7% in YTL terms and by 6.1% in US$ terms
compared to the values at the end of 2005.
The main stock market indicator ISE National-
100 Index decreased to a level of 39,117.5 in
YTL terms (1,620.6 on US$ basis) at the
end of 2006 from 39,777.7 (1,726.2 on
US$ basis) at the end of 2005. The stock
market total traded value increased to YTL 325
billion by 20.4% on YTL basis and increased to
US$ 229.6 billion by 13.8% in US$ terms as of
the end of 2006 when compared to the end of
2005. The average daily traded value stood at
YTL 1.3 billion (US$ 919 million) at the end of
2006.
The market capitalization of 316 ISE traded
companies increased to a level of YTL 230.1
billion (US$ 163.8 billion) at the end of 2006
compared to YTL 218.3 billion (US$ 162.8
billion) at the end of 2005. Six ETFs (Exchange
Traded Fund) are traded on the ISE as of the
end of 2006.
The net equity investment in Turkey by foreign
portfolio investors has been registered at
around US$ 32.8 billion as of end-November
2006 representing 66.4% of the total custody
balance of the stocks.
The turnover in public debt securities on YTL
basis, transacted on the Outright Purchases
and Sales Market, decreased by 20.6% to
YTL 381.8 billion and in US$ terms by 24.8% to
US$ 270.2 billion in 2006, compared 2005.
The Repo/Reverse Repo Market turnover on
YTL basis increased by 36.5% to YTL 2,538.8
billion and in US$ terms by 27.6% to
US$ 1,770.3 billion in the same period.
The average daily traded value in the Outright
Purchases and Sales Market and the
Repo/Reverse Repo Market stood at YTL 11.6
billion (US$ 8.1 billion) as of the end of 2006.*
* Information provided by Istanbul Stock Exchange
Key Information Contacts
Capital Markets Board of Turkey www.cmb.gov.tr
ISE Settlement and Custody Bank Inc.(Takasbank) www.takasbank.com.tr
Central Registry Agency Inc.of Turkey www.mkk.com.tr
The Association of Capital Market Intermediary Institutions of Turkey www.tspakb.org.tr
The Turkish Derivatives Exchange (Turkdex) www.turkdex.org.tr
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