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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2006<br />
ISTANBUL STOCK EXCHANGE<br />
ECONOMIC AND POLITICAL DEVELOPMENTS<br />
Economic and Political Environment<br />
Following a comprehensive economic program<br />
with the strong backing of a single party<br />
majority government for about four years,<br />
Turkey has had significant achievements both<br />
on EU convergence and economic<br />
restructuring. Succesful implementation of the<br />
IMF-supported economic stabilization program<br />
produced impressive results on Turkey’s<br />
macroeconomic performance and strengthened<br />
the developments on key legislations pertaining<br />
to social security, banking sector and tax<br />
administration.<br />
Robust economic growth has been achieved<br />
with 8% on average during the last four years.<br />
Despite strong growth, inflation has come down<br />
to around 8% from around 70% in four years<br />
time. With strong fiscal policy net public debt to<br />
GNP ratio declined to 55.8% at the end of 2005<br />
from 90.5% in 2001.<br />
Following a very busy privatization period in<br />
2005, tenders of state owned enterprises<br />
including Turk Telecom, Tupras (Oil Refinery)<br />
and Erdemir (Iron and Steel Company) resulted<br />
with US$ 6.55 billion, US$ 4.14 billion and<br />
US$ 2.77 billion proceeds, respectively.<br />
The Privatization Administration held a number<br />
of successful tenders in the first half of 2006.<br />
The tender for the privatization of Erdemir,<br />
Turkey’s largest iron and steel producing entity<br />
was concluded on October 4, 2005 and the<br />
bidder proposed to pay USD 2.77 billion for<br />
46.12% of Erdemir’s shares. Sale agreement<br />
was signed on February 27, 2006.<br />
Economic Performance<br />
GDP and GNP grew by 6.4% and 6.3%,<br />
respectively in the first quarter of 2006.<br />
In 2005, the Turkish economy grew by 7.6%.<br />
The strong growth is mainly attributable to the<br />
construction sector which grew by 25.9%.<br />
On the expenditures side, private sector<br />
consumption and investment expenditures<br />
made the highest contribution to growth by 7%<br />
and 8%, respectively.<br />
By the end of June 2006, exports and imports<br />
reached US$ 39.5 billion and US$ 65.2 billion,<br />
respectively, exports registering an increase of<br />
11.5% and imports registering an increase of<br />
18.3% compared to the January-June period of<br />
2005. Accordingly, the rate of imports covered<br />
by exports stood at 60.5%.<br />
The year-on-year consumer price index<br />
increased to 10.12% as of end June 2006, from<br />
8.95% as of end June 2005. The year-on-year<br />
producer price index increased to 12.52% as of<br />
end June 2006, from 4.25% as of end June<br />
2005.<br />
The consolidated budget registered a surplus of<br />
YTL 2.1 billion in June 2006 bringing the year to<br />
date primary surplus to YTL 4.9 billion. Total<br />
revenue increased by 36.63% to YTL 84 billion<br />
and expenditures increased by 24.8%<br />
to YTL 81.6 billion in the first half of 2006<br />
compared to the same period of 2005. Thus,<br />
the consolidated budget surplus is realized as<br />
YTL 2.4 billion, while the consolidated budget<br />
deficit was YTL 3.9 billion in the same period in<br />
2005.<br />
As of the end of June 2006, the ISE-National<br />
100 Index, the main stock market index on<br />
the ISE increased by 11.7% in US$ terms<br />
compared to June 2005. The main stock market<br />
indicator ISE National-100 Index increased to a<br />
level of 1,325.23 on US$ basis at the end of<br />
June 2006 from 1,177 at the end of June 2005.<br />
The stock market total traded value in the first<br />
half of 2006 increased to US$ 137.9 billion by<br />
52.1% over the same period of 2005. The<br />
average daily traded value stood at US$ 1.112<br />
million at end-June 2006.<br />
The market capitalization of 316 ISE traded<br />
companies increased to a level of US$ 128.3<br />
billion at end-June 2006 compared to<br />
US$ 106.1 billion at end-June 2005.<br />
Three Exchange Traded Funds are traded on<br />
the ISE as of end June 2006.<br />
The net equity investment in Turkey by foreign<br />
portfolio investors has been registered at<br />
around US$ 26.4 billion as of end-June 2006<br />
representing 65% of the free float of stock<br />
market.<br />
The turnover in public debt securities<br />
transacted on the Outright Purchases and Sales<br />
Market, decreased by 23% in US$ terms to<br />
US$ 154.8 billion in January-June period of<br />
2006, compared to the same period of 2005.<br />
The Repo/Reverse Repo Market turnover<br />
increased by 141.3% to US$ 885.2 billion in the<br />
same period. The average daily traded value in<br />
the Outright Purchases and Sales Market and<br />
the Repo/Reverse Repo Market stood at US$<br />
8.3 billion as of end-June 2006.<br />
During the second quarter of 2006, ten<br />
companies “Vestel Beyaz Eflya San. ve Tic. A.fi.”.<br />
(a manufacturing company), “Selçuk Ecza<br />
Deposu Ticaret ve Sanayi A.fi.” (a wholesale<br />
trade company), “Asya Kat›l›m Bankas› A.fi.”<br />
(a bank), “Coca Cola ‹çecek A.fi.” (a beverage<br />
company), “Baflkent Menkul K›ymetler Yat›r›m<br />
Ortakl›¤›” (an investment trust), Metro Menkul<br />
K›ymetler Yat›r›m Ortakl›¤›” (an investment trust),<br />
“Taksim Yat›r›m Ortakl›¤› A.fi.” (an investment<br />
trust), “Euro Menkul K›ymetler Yat›r›m Ortakl›¤›<br />
A.fi.” (an investment trust) offered their stocks<br />
for the first time to public and started to be<br />
traded on the ISE National Market. “Silverline<br />
Endüstri ve Ticaret A.fi.” (a consumer trade<br />
company) and “Armada Bilgisayar Sistemleri<br />
Sanayi ve Ticaret A.fi.” (an information<br />
technology company) offered their stocks for<br />
the first time to public and started to be traded<br />
on the ISE Second National Market and the<br />
ISE New Economy Market, respectively.<br />
The amount of funds raised by the IPOs of ten<br />
companies was US$ 855.4 million.*<br />
* Istanbul Stock Exchange<br />
Key Information Contacts<br />
Capital Markets Board of Turkey www.cmb.gov.tr<br />
The Association of Capital Market Intermediary Institutions of Turkey www.tspakb.org.tr<br />
ISE Settlement and Custody Bank Inc.(Takasbank) www.takasbank.com.tr<br />
Central Registry Agency Inc. of Turkey www.mkk.com.tr<br />
The Turkish Derivatives Exchange (TurkDEX) www.turkdex.org.tr<br />
2003-ORIGINS OF GROSS DOMESTIC PRODUCT (%)<br />
Services Industry (excl construction)<br />
Agriculture, forestry & fishing Construction<br />
2003-COMPONENTS OF GROSS DOMESTIC PRODUCT (%) (a)<br />
Private consumption Government consumption Fixed investment<br />
Stockbuilding Exports of goods & services Imports of goods & services<br />
57.9<br />
26.8<br />
11.8<br />
3.5<br />
70<br />
60<br />
50<br />
40<br />
30<br />
20<br />
10<br />
0<br />
-10<br />
-20<br />
-30<br />
-40<br />
66.6<br />
13.6 15.5<br />
7.3<br />
27.4<br />
-30.7<br />
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