Local investors reclaim Istanbul Stock Exchange
Posted by meb at March 10th, 2009
Foreigners, who once practically ruled the Istanbul Stock Exchange, continue unloading portfolios. Local investors, who have increased their share at the bourse, are also keeping a close eye on the global markets, hoping to turn the crisis into an opportunity.
Foreign investors continue to rapidly exit the Turkish market as they lose risk appetite due to an instable climate brought upon by the global turmoil, which has gained intensity as of the last quarter of 2008.
U.S dollar appreciated nearly 40 percent against the Turkish Lira since mid-September and hit an all-time high of 1.80 liras on Monday. The rising value of the dollar has forced the Turkish Central Bank to intervene. The Bank announced Monday it would auction up to $50 million a day to stabilize the foreign exchange market. However, Central Bank’s intervention may simply not be enough in the current environment, where the high demand for greenback continues.
Foreign investors, who have practically ruled the Istanbul Stock Exchange, or IMKB, continue unloading their portfolios, also pulling out of Turkey’s bond markets. The amount of foreign currency that exited Turkey starting mid-September until the end of February total $9.683 billion. In line with these worrisome developments, share of domestic investors at the Istanbul bourse, in terms of the number of equities, has surpassed that of foreigners for the first time in years.
In terms of the number of equities, domestic investors had a 40.28 percent share in the IMKB in Oct. 15, 2007, when the benchmark IMKB-100 index closed at a historic high of 58,231 points. The figure rose to 50.24 percent as of March 6. Over the period, the share of foreign investors declined from 59.272 percent to 49.76 percent. Foreign investors’ share dropped from 72.63 percent to 63.29 percent in terms of market value, while that of domestic investors rose from 27.37 percent to 36.71 percent.
Share sale requests by domestic players, as well as the selling by foreigners had a role in the rise in the share of domestic investors. Since Sept. 10, 2008, foreign investors sold 1.247 billion shares. The number of equities in their portfolios fell from 13.369 billion to 12.122 billion. Over the period, domestic investors increased the number of their shares by 2.82 billion from 9. 418 billion to 12.238 billion.
Share sale requests by the key partners of Sabancı Holding, Turkey’s second-biggest industrial group, and Akbank, the country’s biggest bank by market value, caused a rise of 535 million equities for domestic investors. During the same period, foreign outflow from the IMKB totaled $2.093 billion, while net foreign outflow from Turkish government bonds amounted to $7.053 billion. In the last one week since Feb. 27, net foreign outflow from the IMKB and bond market is predicted to have surpassed $1.5 billion.
Foreigners’ currency accounts at banks also declined $537 million.
The decline of the bourse between Sept. 12 and Feb. 27, when foreign outflow sped up, reached 35 percent, while the dollar appreciated 40 percent.
Foreign investors’ total portfolios at the IMKB declined to $18.2 billion, shedding $22.3 billion. Their portfolios in domestic government bonds dropped by $12.797 billion to $16.2 billion. In total foreigners’ IMKB and bond portfolios melted a whopping $35.2 billion so far.
source: Hurriyet daily news
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