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TURKEY INSIGHT: The puzzle of Borsa Istanbul’s foreign-held shares boom . Borsa Istanbul investors have since December been busy swatting away the sceptics after the foreign-held share of equities traded on the stock exchange fell into the 58%s for the first time since 2005. The sharp fall was acknowledged but the idea that it was caused by capital outflows was rebutted. It was all down to some negligible reasons, if the defenders of the stock market were to be believed.
Turkey watchers of course are accustomed to this kind of thing. The central bank sharply cuts its policy rate and the lira shows its muscles. It’s all quite normal on the Turkish markets. And the bulls can always work their imaginations to reason why things are so and are nothing to worry about.
It is actually impossible to satisfactorily pin down the data on foreign holdings in Borsa Istanbul stocks as the available figures include “foreigners with moustaches”, or “the moustaches”, short for Turks that trade via foreign brokerage houses. The accounts they are said to use, whether in reality representing foreign or Turk investors, generally perform high volume transactions with a big impact on headline share prices. Thus, observers of the Istanbul stock exchange naturally follow the “foreign share” to obtain some kind of gauge of capital flows into or out of the market.
On January 22, Akin Tuzun of VTB Capital published a note of correction entitled “Foreign ownership back to recent peaks”. Tuzun added: “The Turkish equity market has seen a significant re-entry of foreign institutional money in January."
46 TURKEY Country Report OUTLOOK 2020 www.intellinews.com