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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT OCTOBER 2008ISTANBUL STOCK EXCHANGEHuseyin ErkanChairman & CEOThe Stock Market total traded valuemaintained its vivacity on the other hand,amounting to US$ 144 billion for the firsttwo quarters of the year.The global economy seems to stand at adifficult point, where demand slows sharply inmost developed economies and inflation risesall over the world, but particularly indeveloping countries. Global growth, whichcontinued robustly in the last four years, isexpected to retard notably in the second halfof 2008, before recovering, gradually in 2009.In developed countries, business andconsumer sentiment have continued to retreat,while industrial production has weakenedfurther. On the other hand, there have beensigns of weakening business activity inemerging economies as well. Risks related toglobal imbalances, such as the continuingdecline of the US Dollar and slower growth ofthe US economy, and rising international oilprices, still lead to worries.It is worth noting that, in spite of the globalslowdown, rising energy and commodityprices have boosted inflationary pressureespecially in the developing countries. Oilprices have risen significantly, driven by supplyconcerns, while food prices have increaseddue to adverse weather conditions.Against this background, the top priority forpolicymakers is to head off rising inflationarypressure, while also holding risks to growthunder control. In many emerging economiestighter monetary policy and greater fiscalrestraints are required, which, in some cases,is combined with more flexible exchange ratemanagement. In major developed economies,on the other hand, monetary tightening is lessimposing since inflation expectations andlabor costs are projected to remain wellanchored while growth weakens noticeably,but inflation pressures still need to bemonitored cautiously.Not surprisingly, financial market conditionsare not very favorable, and the Istanbul StockExchange (ISE) has got its share. The ISENational-100 Index, the main indicator of theISE, decreased by 40% in US$ terms in thefirst half of 2008, compared to the values atend-2007. The Stock Market total traded valuemaintained its vivacity on the other hand,amounting to US$ 144 billion for the first twoquarters of the year. The average daily tradedvalue stood at US$ 1.1 billion during the sameperiod.As of June-2008, 320 companies are tradedon the ISE. The market capitalization of the ISEdeclined by 33% compared to end-2007,dropping to US$ 194 billion as of end-June2008.The share of foreign portfolio investors in thefree-floating shares of the ISE stood at 72% asof end-2007 while this decreased only slightlyto 69.8% as of June-2008.The average daily trading volume on the ISEBonds and Bills Market, on the other hand,maintained its level of 2007. In the first half of2008, the daily average trading volume of theOutright Purchases and Sales Marketdecreased by 12.5% to US$ 969 million, whilethe average daily trading volume of theRepo/Reverse Repo Market showed anincrease by 1.2% to reach US$ 8,049 as ofJune 2008.FUTURE OUTLOOK• As part of its strategic plan in the mid-term,the ISE is planning to increase the number ofpublic offerings through a number of activitiesin 2008. A series of seminars, private meetingsare planned to be organized across the countryin cooperation with the local Chambers ofCommerce and/or Industry in order to increasethe awareness among the companies aboutpublic offerings; the benefits and procedures.As the second stage, consultancy units will beestablished at the Chambers of Commerceand/or Industry of every city, which will informthe companies on public offerings without anycharge. The training of the personnel of theseunits will be given by the Istanbul StockExchange.• The ISE and the Istanbul Gold Exchangesigned a cooperation protocolon July 17, 2008 in order to attract the preciousmetal companies.• The ISE, as the coordinator of theOrganization of Islamic Conference MemberStates’ Stock Exchanges Forum a platform toreinforce the cooperation among theparticipating stock exchanges, will host thesecond Forum Meeting and the WorkingCommittee meetings on October 18-19, 2008 inIstanbul.• Work towards trading of warrants on the theIstanbul Stock Exchange is being carried out incoordination with the Capital Markets Board(CMB) of Turkey. In this regard, CMB willregulate warrant trading and the ISE willdetermine the listing and trading principles.CONTACT INFORMATIONContact Name Mr. Eren KilicliogluE-mail dis@imkb.gov.trWebsite www.ise.orgPAGE 54