Transcript VADELİ İŞLEM PİYASALARININ GENEL FAYDALARI

HOW CAN WE INCREASE THE
ATTRACTIVENESS OF THE REGION AS AN
AREA FOR INVESTMENT?
Hüseyin ERKAN
Chairman & CEO
Istanbul Stock Exchange (ISE)
Conference on the Prospects for Capital Markets in Southeast Europe
Sofia, 16 September 2008
Key Trends in Global Markets
 High volatility in the financial markets
 More strict regulatory standards
 Increasing role of governments (liquidity injection)
 Closer coordination among international institutions
 International risk surveillance
 More accurate and timely disclosure (Financial
Stability Forum - 100 day plan of G-7 Countries)
 Sovereign Wealth Funds (Gulf & Far East Countries)
2
Trends in Stock Exchanges’ Industry
1998
for-profit
38%
Demutualization
2006
for-profit
75%
not forprofit
62%
Mergers and Acquisitions
not forprofit
25%
•OM Group
•Euronext
NASDAQ- OM
Consolidation
NYSE-Euronext
Fragmentation
* MiFID
*ECN
Exchanges vs
Dark Liquidity
Pools
3
Emerging Markets vs Developed Markets
Market Capitalization
2002
1997
89%
92%
8%
11%
2007
72%
28%
Traded Value
2002
1997
87%
2007
92%
85%
13%
8%
15%
4
Emerging markets
Source: WFE
Strong Potential for Growth
in Emerging Markets
•Until now, emerging
market exchanges enjoyed
rapid growth based on the
expansion of cash equities
market
Source: Credit Suisse
•Increasingly, emerging
markets exchanges are
exploring revenue
diversification opportunities
as the market structure
becomes more mature and
competition amongst
5
exchanges intensifies
Improving Alliances
 ISE and ASE are about to launch a common index
 ETFs on this index will be traded in both exchanges
 Creating fair, efficient and transparent market
environment with little or no barriers to trade between
the exchanges operating in the same region
 Organizing joint training and staff exchange program
6
ISE’s International Standing
 President of the “Federation of Euro-Asian Stock
Exchanges” (FEAS)
 Coordinator of the “OIC Member States Stock
Exchanges Forum”
 Participation to Regional Exchanges
 Baku Stock Exchange (5.5%)
 Kyrgyz Stock Exchange (24.52%)
7
FEAS - FEDERATION OF
EURO-ASIAN STOCK EXCHANGES
29 Countries
32 Member Exchanges
8 Affiliate Members
MEMBER EXCHANGES






ALBANIA
 BULGARIA  JORDAN
AZERBAIJAN (2) CROATIA
 KAZAKHSTAN
ARMENIA
 EGYPT
 KYRGYZ REPUBLIC
BAHRAIN
 GEORGIA
 MACEDONIA
BELARUS
 IRAN
 MOLDOVA
BOSNIA
HERZEGOVINA (2) IRAQ

MONGOLIA

OMAN

TURKMENISTAN

PAKISTAN (2)

TURKEY

PALESTINE

UKRAINE

ROMANIA


SERBIA

MONTENEGRO
UNITED ARAB
EMIRATES

UZBEKISTAN
8
FEAS Region Statistics
Statistical Comparison / FEAS Region
Number of Companies Traded
2004
8.003
2005
8.348
2006
9.057
2007
9.498
Market Capitalization (US$ Millions)
377.280 638.041 690.455 1.065.337
Total Volume (US$ Millions - Stocks)
273.616 467.903 505.163
615.733
Total Volume (US$ Millions - Bonds)
314.833 429.311 380.662
478.517
Source: FEAS
9
How FEAS Serves to the Needs of
Member Stock Exchanges ?
 Promotes mechanisms for reliable, transparent and
continuous trading and settlement
 Creates greater awareness and visibility for the region’s
stocks and investment opportunities
 Helps to promote the listing of home market investment
grade companies in the regional markets and encourages
them to be included in regional indexes (i.e. Dow Jones)
 Provides network and updated information to the new
members in the region, with meetings, web applications &
publications (with the joint work of FEAS, ISE, WFE and
OECD)
 “Best Practices for the Development of Stock Exchanges in
Transition Economises”
 “Alternative Sources of Finance for SMEs”
10
How FEAS Serves to the Needs of
Member Stock Exchanges ?
 Create linkages among:
 The regions’ intermediaries
 The regions’ data providers
 The regions’ settlement and custody institutions
 Create a centeralized training hub for FEAS members
in order to encourage research and regulatory
implementation via bilateral exchange program
 Promote Corporate Governance
11
FEAS Task Forces
 MEDIA (Awareness, Information and Marketing)
 REGIONAL INDICES (Dow Jones Indexes)
 CORPORATE GOVERNANCE (Common Principles)
 AFFILIATE MEMBERS (Regional CSD Membership)
 FEAS DATA CENTER
 XBRL (Extensible Business Reporting Language)
 RESEARCH & DEVELOPMENT
12
Turkey: Gateway to Europe, Asia
and the Middle East

Turkish economy has a growing potential in different sectors
 Property projects


Telecommunication & Technology
Infrastructure Projects (utilities, ports, highways)

Turkey stands to be a corridor in the middle of the GCC countries,
Europe and Asia

Net FDI to Turkey in 2006-2007 is US$ 20 billion in each year (1/3
of the net FDI comes through the ISE)

The Turkish capital markets are highly liquid and appeal to foreign
investors (high level of investor confidence)

Enhanced market infrastructure


Legal framework in harmony with the international standards
Technological infrastructure is strong and competitive
13
Investment Opportunities in Turkey
Investors' Preference
What Turkey Offers
A well-developed banking sector
46 local commercial and investment banks
4 participation banks
Free movement of funds
Investment-friendly policies
100 % foreign ownership allowed
Tax treaties with 86 countries
Booming property market
Profitable investment opportunities
Development of the energy industry for the region
Growing need for infrastructure development
Project financing for fast growing companies
World's 5th largest bond market
A wide-range of capital market investment
ETF market is growing
instruments
New regulations for structured warrants and
asset backed securities are on the way
14
ISE MARKETS
STOCK MARKET
BONDS and BILLS MARKET
FOREIGN SECURITIES MARKET
National Market (291 listed co.s)
First Session: 9:30-12:00
Second Session: 14:00-17:00
Outright Purchases and Sales Market
Same day value date: 9:30-12:00/13:00-14:00
Other value dates: 9:30-12:00/13:00-17:00
Second National Market (14 unlisted co.s)
First Session: 9:30-12:00
Second Session: 14:00-17:00
Same day beginning value date: 9:30-12:00/13:00-14:00
Other beginning value dates: 9:30-12:00/13:00-17:00
New Economy Market (3 unlisted co.s)
First Session: 9:30-12:00
Second Session: 14:00-17:00
Watch List Companies M. (10 unlisted co.s)
14:00-15:00
Exchange Traded Funds M. (8 funds)
International Bonds Market
9:30-12:00/13:00-17:00
Repo/Reverse Repo Market
132 Members (Total)
91 Brokerage Houses
12 Inv. & Develop. Banks
29 Commercial Banks
132 Members (Total)
91 Brokerage Houses
12 Inv. & Develop. Banks
29 Commercial Banks
Clearing settlement: T+3,....,T+15
Clearing settlement T,... ,T+90
Stock Market Price Margins:  10% per session
104 Members (Total)
104 Brokerage Houses
Clearing settlement T+2
ISE Settlement & Custody Bank (Takasbank)
Central Registry Agency
15
ISE’s Market Performance
Stock Market
Number of Intermediaries
Number of Companies Traded
Total Market Capitalization
Daily Average Trading Value
Total Trading Value
2007
2001
(USD Billion)
(USD Billion)
104 intermediaries 126 intermediaries
319 Companies 310 Companies
290
48
1,2
0,3
300,8
80,4
Bonds and Bills Market
Daily Average Trading Value
Daily Average OTC Trading Value
Total Trading Value
9,1
2,2
2.831,1
2,6
3,3
1.517,4
Total Daily Average Trading Value
Total Markets Trading Value
12,5
3.131,9
6,2
1.597,8
16
ISE Markets Total Trading Volume
(Billion USD)
3,000
Stock Market
Bonds & Bills Market
2,500
2,000
1,500
6 times
Turkey’s GDP
1,000
0
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008/7
500
17
ISE Stock Market Trading Volume
(Million USD)
250,000
425 million
stocks
per day
1,400
1,200
1,000
200,000
800
150,000
600
100,000
400
50,000
200
0
0
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008/7
Total traded value
300,000
1,600
Daily average traded value
350,000
18
Scale of ISE Companies
(as of August 29, 2008)
Scale of ISE Companies (As of August 29, 2008)
No of Co's
A
B
C
D
E
F
G
More than US$ 1bn
US$ 500m - 1bn
US$ 200m - 500m
US$ 100m - 200m
US$ 50m - 100m
US$ 25m - 50m
Less tan US$ 25m
Total
38
26
47
33
40
37
97
318
Total Mkt Cap
As % of
(Million USD)
Total Mkt Cap
187.613
11,9
18.621
8,2
15.321
14,8
4.848
10,4
2.931
12,6
1.346
11,6
1.057
30,5
231.737
100,0
19
Stock Market Capitalization By Sector
(as of August 29, 2008)
Sector
Financial Institutions
M.Cap (USDm)
%
118,620
51.19
58,197
25.11
205
0.09
28,935
12.49
9,743
4.20
10,843
4.68
957
0.41
Education, Health, Sports & Other Social Services
3,025
1.31
Electricity, Gas & Water
1,211
0.52
Industrials
Mining
Transportation, Communication And Storage
Wholesale & Retail Trade, Hotels & Restaurants
Construction & Public Works
Technology
231,737 100.00
20
Market Capitalization 2008/7 (Billion USD)
ChinaBras il
India-Bom bay
India N.S.E
Korea
S.Africa
Taiwan
China-Shenzen
Mexico
Malays ia
Turkey
Is rael
Chile
Indones ia
Poland
Thailand
Eygpt
Colom bia
Philippinnes
Iran
Peru
Argentina
Slovakia
Berm uda
Turkey; 245
0
500
1,000
1,500
2,000
Source: WFE
2,500
21
Market Traded Value 2008/7 (Billion USD)
ChinaKorea
ChinaTaiwan
Brasil
India N.S.E
S.Africa
India-Bom bay
Turkey
Indonesia
Thailand
Mexico
Eygpt
Israel
Malaysia
Poland
Chile
Colom bia
Philippinnes
Iran
Argentina
Peru
Slovakia
Bermuda
Turkey; 165
0
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
22
Source: WFE
Number of Listed Companies 2008/7
India-Bom bay
Korea
India N.S.E
Malays ia
ChinaChina-Shenzen
Taiwan
Is rael
Thailand
Poland
S.Africa
Bras il
Indones ia
Eygpt
Mexico
Iran
Turkey
Philippinnes
Chile
Peru
Argentina
Slovakia
Colom bia
Berm uda
Turkey; 319
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
4,500
5,000
23
Source: WFE
Foreign Participation in the IPOs
Total Revenue
(Million USD)
Foreign Participation
(Million USD)
Foreign Participation
(%)
1998
383.35
280.96
73%
1999
90.72
10.06
11%
2000
2,806.22
1,930.01
69%
2001
0.24
0.02
8%
2002
53.95
20.63
38%
2003
11.37
2004
482.58
181.61
38%
2005
1,743.96
1,284.05
74%
2006
930.50
579.36
62%
2007
3,298.31
2,019.57
61%
2008/7
1,900.00
1,150.00
61%
-
0%
Source: ISE
Foreign participation in IPOs is about 66% on average in the last 3 years
24
Foreign Participation in the ISE Stock Market
(as of % of free float market capitalization)
100%
90%
80%
70%
60%
63.9%
57.0%
54.7% 54.3%
52.2%
49.2%
43.0%
40.9%
50%
66.3% 65.3%
72.4% 71.34%
40%
30%
20%
2008/7
2007
2006
2005
2004
2003
2002
2001
2000
1999
1998
0%
1997
10%
Source: CRA
25
Istanbul attracts and appeal to Major
International Financial Institutions










Citigroup
Deutsche Group
Merrill Lynch
Morgan Stanley
Lehman Brothers
Credit Suisse
UBS
EFG Eurobank
Credit Agricole Cheuvreux
Unicorn Investment Bank
26
Ju
n
Ju -05
Au l-0
Seg-05
Ocp-05
No t-0 5
Dev -05
Ja c-055
Fen-0
M b-06
a 6
Ap r-0
M r-0 6
a
Juy -06
n 6
Ju -06
Au l-0
Seg-06
Ocp-06
No t-0 6
Dev -06
Ja c-066
Fen-0
M b-07
a 7
Ap r-07
M r-0
a
Juy -07
n 7
Ju -07
Au l-0
Seg-07
Ocp-077
No t-0
Dev -07
Ja c-07
Fen-0 7
M b-08
a 8
Ap r-08
M r-0
a 8
Juy -0
n 8
Ju -08
Au l-0
g- 8
08
Comparison of ISE-100 with MSCI Indices
(2005/8=100 USD based)
250
200
150
100
50
0
MSCI Developed
MSCI ARABIAN COUNTRIES
MSCI Emerging
ISE National-100
Source: Bloomberg, Morgan Stanley
27
ISE National 100 Index vs.
ISE Corporate Governance Index
120
110
100
90
80
Corporate Governance
National-100
23.05.2008
09.05.2008
25.04.2008
11.04.2008
28.03.2008
14.03.2008
29.02.2008
15.02.2008
01.02.2008
18.01.2008
04.01.2008
21.12.2007
07.12.2007
23.11.2007
09.11.2007
26.10.2007
12.10.2007
28.09.2007
14.09.2007
31.08.2007
70
The firms having a CG rating at the ISE-100 index has a
total weight of 11.74 % in the ISE-100 index
28
P/E Ratios
16.39
15.99
China
MSCI Arabian Countries
India
Argentina
45.6
18.6
14.64
28.0
9.35
Thailand
Korea
MSCI Emerging
Turkey
Czech Rep.
20.1
12
7.59
11.51
MSCI World
Mexico
Brasil
Poland
Russia
10.23
17.5
17.4
17.3
16.8
15.89
16.0
15.5
13.27
15.1
13.7
8.44
13.5
8.05
13.2
11.6
12.4
9.48
Hungary
S.Africa
0.0
20.3
10.25
10.88
5.0
10.0
15.0
29.08.2008
31.12.2007
20.0
25.0
30.0
35.0
40.0
Source: Bloomberg
45.0
50.0
29
Future Outlook
 Road map for co-operation and common projects
 Cooperation among SEE countries’ stock exchanges
should be supported by both the governments and the
regulatory bodies
 Regional transformation should be carried out with an
international perspective on legal, fiscal, social and
regulatory framework as well as in compliance with
MIFID
30