How Deep is Turkish Financial Markets?

What I mean by Turkish financial markets is the exchange office in Istanbul, of where the government of Turkey spurts to develop as global finance center. Equities, both government and private sector fixed income securities, (equity, precious metal, FX based options and warrants) derivatives, commodities such as gold, silver, platinum, electricity are being traded in the place, that recently was renamed as Borsa Istanbul, or shortly BIST.

For a long time, there have been concerns over the insufficient trading volume in the fixed income market. Even officers working at the exchange office acknowledge the lack of deepness in the bond market. Yesterday, in a TV interview, Figen Ozavci, trading sales manager at Meksa Investment, was also complaining about the situation too and she just shared her experience as an example, unburdening of that, she could not find any equities to buy for her client’s account.

As a matter of fact, criticism of low volume in the market is correct to a certain extent. Below here, the chart shows the share of 6 banks’ (AKBNK, Akbank T.A.S., GARAN, T. Garanti Bankasi A.S., HALKB, Turkiye Halk Bankasi A.S., ISCTR, T. Is Bankasi A.S., VAKBN, Vakiflar Bankasi T.A.O., YKBNK, Yapi Kredi Bankasi A.S.) trading volume in total trading volume.

Volume Trends in Turkish Equities Market

With this simplified analysis, the deepness of the market is inevitably questionable. Banks share have always been the most popular among their peers in Istanbul as they never ever have been anywhere. It poses a risk of not having an diversified portfolio while the only one industry drives the market. In the previous days, we saw the credit card restrictions badly influencing the banks share, were also dealing a big blow into all equities.

The recent secondary public offering of the giant food company, Ulker Biskuvi Sanayi A.S. (ULKER) and the state-run real estate investment trust Emlak Gayrimenkul Yatirim Ortakligi A.S. (EKGYO) are to deepen the market but obviously Borsa Istanbul needs more hikes in free float rates of companies already listed on the stock exchange and new joins to the equities market by companies never listed before.