March 2008

Turkish capital market institutions - competing and cooperating in a rapidly developing financial market

Nevzat ÖZTANGUT, TSPAKB

March 2008Brokerage Firms’ Ownership Structure

Source: TSPAKB

95 98 9788 86

69

59 9

96

21 26

44 4

44

4 4

19 8 7

85

74

01

2001 2002 2003 2004 2005 2006 2007

SDIF

Public

Foreign

Domestic

123119 117

112

101 100 99

March 2008Market Capitalisation (Billion $)

Turkey's equity market capitalisation has grown nine-fold between 2002 and 2007.  

When compared to the world’s leading exchanges, the size of the Turkish market is still limited.

6133

112

6947 34

6998

163 164

290

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

ISE Market Capitalisation

Source: ISE

290

2,6543,6943,8524,0144,2234,331

15,651

2,1872,105

0 500 1,000 1,500 2,000

NYSETokyo

Euronext NasdaqLondon

ShanghaiH. Kong

TSXDeutscheBombay

SpainNSE IndiaSao PauloAustralia

SwissOMX

S. KoreaItalyJ SE

ShenzhenTaiwan

SingaporMexico

Oslo BørsMalaysiaIstanbulAthensAmex

WienerTel Aviv

International Comparison (2007)

Source: WFE

March 2008Equity Trading Volume (Billion $)

ISE’s trading volume increased four times between 2002 and 2007.

 

ISE’s trading volume of $300 bn. is still moderate as compared to other stock exchanges.

58 70 84

182

80 71100

148

202227

301

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007

ISE Trading Volume

Source: ISE

301

5,6486,476

10,32415,320

0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500

NasdaqLondonTokyo

Euronext DeutscheShanghai

SpainItaly

H. KongShenzhenS. Korea

SwissOMX Nordic

TSXAustralia

TaiwanNSE India

AmexSao PauloOslo Børs

J SESingapore

BombayIstanbul

OsakaMalaysiaAthens

IrishWiener

International Comparison (2007)

Source: WFE

March 2008Listed Companies

The number of listed companies on the ISE has been increasing since 2003.

However, the overall number of around 320 is still very limited as compared to other exchanges.

258277 285

315 310288 285 297 306

322 319 319

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-01Source: ISE

No. of Listed Companies on ISE

3,0693,307

4,8673,8393,537

319

0 500 1,000 1,500 2,000 2,500 3,000

BombayTSX

SpainLondonNasdaq

TokyoNYSE

AustraliaS. Korea

NSE IndiaH. Kong

Euronext Malaysia

DeutscheShanghai

OMXSingapore

TaiwanShenzhen

Tel AvivAmex

ThailandOsakaEgypt

J SESao Paulo

J akartaWarsawMexico

SwissTehran

Istanbul

Source: WFE

International Comparison (2007)

March 2008Breakdown of Savings (Billion $)

Source: BRSA

237295 321

68

7686

99

99

31

25

109

29

2005 2006 2007/ 09

Mutual Funds

Fixed Income

Equities

Deposits

422

495

558

March 2008Savings’ Preferences

Equities represent 64% of foreign investors’ savings.

Equities’ share in domestic investors’ savings remains at 7%.

67%72% 72%

18%16% 14%

9% 6% 7%

7% 7% 7%

2005 2006 2007/ 09

Equities

Mutual Funds

Fixed Income

Deposits

Domestic Investors' Savings

Source: BRSA

61%55%

64%

33%39%

31%

6% 7% 5%

2005 2006 2007/ 09

Deposits

Fixed Income

Equities

Foreign Investors' Savings

Source: BRSA

March 2008

0.39

0.56 0.55

1.371.27 1.20

1.111.01 1.02 1.06 1.081.07

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008-01

Number of Equity Investors (Million)

Source: CRA

March 2008Equity Ownership vs. Trading Volume

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007

For. Institutional

For. Corporation

For. Individual

Dom. Institutional

Dom. Corporation

Dom. Individual

Source: TSPAKB

Equity Trading Volume

Foreign investors hold around 70% of total equities traded in the market.

Domestic individual investors provide market liquidity.

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 2004 2005 2006 2007

For. Institutional

For. Corporate

For. Individual

Dom. Institutional

Dom.Corporate

Dom. Individual

Equity Ownership

Source: CRA

March 2008Derivatives Trading Volume of Intermediaries (Billion $)

2021

162

413

2005 2006 2007

Brokerage Firms

Banks

5

25

182

Source:TURKDEX

March 2008Turkish Capital Market Agenda

Short-term: New Instruments

Warrants Mortgage backed securities Single-stock futuresOptionsCorporate bonds

 Medium-term: New Regulations

Ability for financial innovationAdoption of the EU acquis

March 2008Need for Cooperation

National

Cooperation among financial intermediariesCooperation with regulatory authorities International

International Organization of Securities Commissions (IOSCO)International Council of Securities Associations (ICSA)