FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010ISTANBUL STOCK EXCHANGEIt is worth noting that the ISE ranked thirdamong the world markets in terms ofperformance on local currency basis.Huseyin ErkanChairman & CEOFollowing a period of two years filled withdifficulties in the global economy, the worstseems to be over and a global economicrecovery is under way. The exceptional stepsthat were taken by policy makers in bothdeveloped and emerging countries after thecollapse of Lehman Brothers in September2008 have gone a long way toward taking thefinancial markets under control and restoringcapital flows to developing countries. Theimmediate outflow of international capital fromdeveloping countries to safe havens in theaftermath of the crisis has more or lessreversed itself. As a result, interbank liquidity indollar markets seems to revert to its pre-crisisrange, a large number of emerging-marketexchange rates have recovered their pre-crisislevels against the U.S. dollar, equity marketshave recovered much of their initial losses,and capital flows to developing countries haveresumed. Borrowing costs for emergingmarket borrowers, although still high, havestabilized over the last few quarters. The realsector recovery is also under way. Globalindustrial production, although 5 percentbelow its level compared to a year earlier inOctober 2009, improved in the third quarter of2009. On the other hand, in addition to beingfragile, the recovery is expected to deceleratein the second half of 2010 as the effect offiscal and monetary measures fade. Whilerecovery dominates all sectors, the negativeimpact of the Dubai World event and the creditrating downgrades of Greece and Mexico atthe end of 2009 should not be overlooked.Especially the developments in the Euro zoneshould be followed closely.In this atmosphere, the Istanbul StockExchange has got its share from the recovery.The ISE 100 Index, the main indicator of theISE, increased by 101 percent in US$ terms in2009, compared to the value at end-2008. It isworth noting that the ISE ranked third amongthe world markets in terms of performance onlocal currency basis. The Stock Market totaltraded value maintained its vivacity, with a totaltrading volume amounting to US$ 316 billionfor the year as a whole. The average dailytraded value stood at US$ 1.3 billion duringthe same period. As of end-2009, the marketcapitalisation of 315 companies traded on theIstanbul Stock Exchange, increased by 97percent compared to end-2008, reachingUS$ 236 billion. The share of foreign portfolioinvestors in the free-floating shares of the ISEstood at 67 percent as of end-2009, up from66 per cent as of end-2008.The average daily trading volume on the ISEBonds and Bills Market, on the other hand,showed a slight decrease of 12 percent during2009. During the year, the total trading volumeof the Outright Purchases and Sales Marketincreased by 13 percent to US$ 270 billion,while the total trading volume of theRepo/Reverse Repo Market decreased by15 percent to almost US$ 2 trillion as ofend-2009.Included in the ISE’s plans for 2010, is theestablishment of the “Emerging CompaniesMarket” with a view to offering new tradingopportunities for small and medium sizedcompanies (SMEs). The main purpose that liesbehind this initiative is to allow SMEs to haveconvenient access to the capital markets fortheir financing needs. Another importantinitiative that we are taking this year is theorganization of the “Initial Public Offering (IPO)Turkey Summit” in Istanbul in May. The Summitwill bring together some 1,350 sizeable Turkishcompanies that are not yet traded on theISE, as well as the leading companies inthe financial circles and we expect thisorganization to be instrumental in bringingnew companies to the ISE.HISTORY AND DEVELOPMENTIn 1981, the Capital Market Law was enactedand one year later, the Capital Markets Boardwas established. In October 1983, theParliament approved the Regulations for theEstablishment and Operations of SecuritiesExchanges, which paved the way for theestablishment of the ISE, formally inauguratedin 1985.The ISE provides a fair and transparentenvironment for trading of a wide variety ofsecurities namely, stocks, exchange tradedfunds, warrants, government bonds, Treasurybills, corporate bonds, money marketinstruments (repo/reverse repo), foreignsecurities etc. Currently, there are four marketsoperating at the ISE; the Stock Market, the Bondsand Bills Market and the Foreign SecuritiesMarket and Emerging Companies Market.In 1989, the foreign exchange regime wasamended to allow non-residents to invest inTurkish securities, making the Turkish securitiesmarkets open to foreign investors without anyrestrictions on the repatriation of capital andprofits.The ISE was recognized as a “DesignatedOffshore Securities Market” by the U.S.Securities and Exchange Commission in 1993and was designated as an “appropriate foreigninvestment market for private and institutionalJapanese investors” by the Japan SecuritiesDealers Association in 1995. Likewise, the ISEhas been approved by the Austrian Ministry ofFinance as a regulated market in accordancewith the regulations of the Austrian InvestmentFund Act in 2000. As a result of all thesedevelopments, foreign investors now accountfor a substantial volume of daily trading andhold around 67 percent of the publicly-heldstocks in their portfolios amounting to US$ 55.6billion, as of end-2009.The ISE currently owns 32.62% of the ISESettlement and Custody Bank, 30% of theCentral Registry Agency and 18% of the TurkishDerivatives Exchange. On the internationallevel, the ISE has participations in the KyrgyzStock Exchange and Baku Stock Exchangewith stakes of 24.51% and 5.26%, respectively.FUTURE OUTLOOK• The ISE plans to establish the “EmergingCompanies Market” with an aim to offer adifferent application procedure to small andmedium sized companies (SMEs) for tradingon the Istanbul Stock Exchange. The ideabehind the facilitation of the applicationprocedures is to give these companies theopportunity to raise funds through publicofferings, as a long term and low costfinancing alternative. Furthermore, in order tocontribute to price formation and liquidity,trading on the Emerging Companies Market,different from the continuous auction systemon the Stock Market, will be through acombination of single price method andcontinuous auction with market maker system.The companies traded on the Market,demonstrating progressive performance intime, will have the opportunity to be transferredto any of the submarkets of the ISE StockMarket.• As part of its efforts towards increasing thenumber of public offerings, the ISE willorganize “Initial Public Offering (IPO) TurkeySummit” in Istanbul on May 6-7, 2010. TheSummit aims to bring together around 1,350leading Turkish companies that are yet nottraded on the Istanbul Stock Exchange andfinancial intermediaries, audit firms, law firms,consultancy firms, sectorial associations aswell as domestic and international privateequity funds, investment banks and otherinstitutional investors, which are considered tobe important constituents of public offerings.PAGE 94
FEDERATION OF EURO-ASIAN STOCK EXCHANGES ANNUAL REPORT JUNE 2010ISTANBUL STOCK EXCHANGEOFFICIAL 6 MONTH STATISTICSUS$ millions# Shares millionsTotal Volume Average Daily Volume Total Volume Average Daily VolumeStocksJul-09 29,581.02 1,286.13 18,981.53 825.28Aug-09 35,060.79 1,669.56 20,599.87 980.95Sep-09 26,910.20 1,345.51 15,177.86 758.89Oct-09 34,769.27 1,655.68 18,459.30 879.01Nov-09 28,096.27 1,478.75 15,523.23 817.02Dec-09 33,122.00 1,440.09 19,240.69 836.55TOTAL 187,539.55 1,479.29 107,982.48 849.62BondsJul-09 29,079.68 1,264.33 0.045 0.002Aug-09 22,567.19 1,074.63 0.0333 0.0016Sep-09 22,963.86 1,148.19 0.0341 0.0017Oct-09 24,287.11 1,156.53 0.0345 0.0016Nov-09 18,619.94 980.00 0.0272 0.0014Dec-09 17,872.77 777.077 0.0255 0.0011TOTAL 135,390.55 1,066.79 0.20 0.002OtherJul-09 162,807.93 7,078.61 0.0627 0.0027Aug-09 163,013.62 7,762.55 0.0605 0.0029Sep-09 143,762.49 7,188.12 0.0544 0.0027Oct-09 167,632.01 7,982.48 0.0622 0.003Nov-09 153,852.41 8,097.50 0.0565 0.003Dec-09 179,375.75 7,798.95 0.0675 0.0029TOTAL 970,444.21 7,651.37 0.36 0.003MarketCapitalization(US$ millions)IndexMONTHLY STOCK VOLUME VS INDEX(US$ millions)StocksIndexMONTHLY MARKET CAPITALIZATION(US$ millions)Jul-09 196,795.71 1,690.17Aug-09 209,607.42 1,812.43Sep-09 217,560.15 1,888.85Oct-09 213,486.19 1,853.22Nov-09 204,750.13 1,781.28Dec-09 235,996.15 2,068.18CONTACT INFORMATION40,00035,00030,00025,00020,00015,00010,0005,00002,500 250,0002,000 200,0001,500 150,0001,000 100,000500 50,00000Jul Aug Sep Oct Nov Dec Jul Aug Sep Oct Nov DecContact Name Mr. Eralp Polat E-mail international@imkb.gov.tr Website www.ise.orgPAGE 95
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