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equity market further deteriorates, the company said on June 23.
As highlighted in the MSCI 2020 Market Accessibility Review released on June 17, the accessibility level of Turkey’s equity market has been adversely impacted by the introduction of short-selling and stock lending bans in October 2019 and February 2020, respectively, MSCI noted.
These bans severely restrict the ability of institutional investors to express views in active investment and hedge portfolio risk, it added.
“While volatility increased dramatically due to the COVID19 pandemic, global equity markets remained accessible and continued to function well, allowing issuers to raise capital and investors to manage risk during the crisis,” Dimitris Melas of the MSCI said.
“In the last 12 months, two important Emerging Markets, Argentina and Turkey, suffered substantial deterioration in market accessibility that could lead to their exclusion from the MSCI Emerging Markets Index,” he observed.
MSCI also pointed out that it reclassified Iceland as a Frontier Market from Standalone Market after capital controls, including a special reserve ratio, were removed on March 6, 2019.
Turkey had a weighting in the MSCI emerging market index of nearly 2% at the end of 2014, but it has now shrunk to 0.4%. Its share in the MSCI ACWI, excluding the US, and the MSCI ACWI global indices, is close to zero.
While foreign investors represent only 0.8% of the total Borsa Istanbul investor base, they account for around a quarter of its daily trading volume, according to Reuters. Also, non-residents now hold only around 6% of Turkey’s sovereign debt compared with 29% in 2013.
Kim Catechis, head of investment strategy at Legg Mason affiliate Martin
8 TURKEY Country Report July 2020 www.intellinews.com
