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FEDERATION OF EURO-ASIAN STOCK EXCHANGES SEMI ANNUAL REPORT MAY 2005
ISTANBUL STOCK EXCHANGE
ECONOMIC AND POLITICAL DEVELOPMENTS
Politic and Economic Environment:
Turkey’s serious steps towards economic
reforms and a one party majority in the
Parliament after the 2002 general elections
brought political and economic stability.
The government implemented a three-year
economic program successfully between
2002-2004 and showed its willingness to
continue structural reforms with a new threeyear
stand-by agreement with the IMF for the
years 2005-2008. As a result of the political
stability and adherence to economic and
political reforms, Turkey has recorded strong
economic growth for three consecutive years
in a row and exhibited an increase in exports
by nearly doubling figures during the
program while bringing down the inflation to
a historic low of 9.3% at the end of 2004.
Finally, due to strong economic and political
performance during this three years’ time,
Turkey has been granted a date to open
negotiations for full membership at the
European Union (EU) Summit on the 17th of
December 2004 further, the road to full
membership is expected to give a boost to
the Turkish economy in the coming years.
Turkey has seen the positive outcomes of its
devotion to an economic program which
included the implementation of structural
reforms and tight fiscal and monetary
policies for three years ending 2004.
Turkey’s growth rate reached 7.9% in 2002,
5.8% in 2003 and accelerated to 8.7% during
the first three-quarters of 2004. Economic
growth was accompanied by a decrease in
inflation to single digits and record highs in
exports as well as a recovery in domestic
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demand and a strengthening of the Turkish
Lira. As a result of economic stability, the
government decided to introduce the new
currency “New Turkish Lira (TRY)” as of
January 1, 2005. The Turkish Lira previously
in circulation is converted to New Turkish Lira
as TL 1,000,000 = TRY 1.
Also, a new three-year stand-by agreement
with the IMF covering the years 2005-2008
will ensure the continuance of sound
macroeconomic policies, structural reforms,
tight fiscal and monetary policies as well as
easing the public sector debt dynamics.
The consequence of the 16-17th of
December 2004 the EU Leaders’ Summit
was to open negotiations aimed at full
membership of Turkey to EU and Turkey is
expected to start accession negotiations in
October 2005. Negotiations are expected to
take nearly a decade; however, the process
of negotiations will help sustain economic
and political stability through the roadmap
drawn by the EU. EU membership anchor is
expected to increase the inflow of foreign
portfolio and direct investments to Turkey.
Economic Performance:
Due to Turkey’s success in the
implementation of tight fiscal and monetary
policies, inflation rate in 2004 was below the
year-end target as in the two previous years.
A year-to-year CPI rate for 2004 announced
by the State Institute of Statistics was 9.3%,
compared to the official 12% target.
Key Information Contacts
Capital Markets Board of Turkey www.cmb.gov.tr
The Association of Capital Market Intermediary Institutions of Turkey www.tspakb.org.tr
ISE Settlement and Custody Bank Inc. (Takasbank) www.takasbank.com.tr
Central Registry Agency Inc. of Turkey www.mkk.com.tr
The Turkish Derivatives Exchange (TurkDEX) www.turkdex.org.tr
ECONOMIC RATIOS
Domestic
savings
Turkey
Lower-middle-income group
Trade
Indebtedness
Investment
GROWTH OF INVESTMENT AND GDP
(%)
40
30
20
10
0
-10
-20
-30
-40
-50
97
GDI GDP
As a result of strict monetary policy and
strong fiscal performance, the Central Bank’s
overnight interest rates declined to 18% at
the end of 2004, from 26% at the end of
2003. Meanwhile, exports increased by
32.9% to US$ 62.8 billion and imports
increased by 40.1% to US$ 97.2 billion in
2004 as compared to 2003.
In 2004, the ISE-National 100 Index, the main
stock market index on the Istanbul Stock
Exchange (ISE) increased by 34.1% in TRY
terms and by 38.2% in US$ terms as
compared to the values at the end of 2003.
The main stock market indicator, the ISE
National-100 Index increased to a level of
24,972 in TRY (US$ 19,655) at the end of
2004 from 18,625 (US$ 14,660) at the end of
2003. The stock market yearly total traded
value increased by 42.1% in TRY to TRY
208.4 billion and by 47.5% in US$ to US$
147.8 billion in 2004 compared to 2003.
The market capitalization of 297 ISE traded
companies increased to a level of TRY 132.6
billion (US$ 98.1 billion) at the end of 2004
from TRY 96.1 billion (US$ 69.0 billion) at the
end of 2003.
The turnover in public debt securities,
transacted on the Outright Purchases and
Sales Market, increased to TRY 372.7 billion
(US$ 262.6 billion) in 2004 from TRY 213.1
billion (US$ 144.4 billion) in 2003. The
Repo/Reverse Repo Market turnover
increased to a level of TRY 1,551.4 billion
(US$ 1,090.5 billion) in 2004 from TRY
1,040.5 billion (US$ 701.5 billion) in 2003.
98 99 00 01 02 03
* World Bank reports