Turkey
has one of the most liberal foreign exchange regimes
in the world, with a fully convertible currency as
well as a policy that allows foreign institutional
and individual investments in securities listed on
the Istanbul Stock Exchange, (ISE)
since 1989. There are no restrictions on foreign portfolio
investors trading in the Turkish securities markets.
Decree No. 32 passed in August 1989, removes all restrictions
on overseas institutional and individual investment
in securities listed on the Istanbul Stock Exchange.
Hence, the Turkish stock and bond markets are open
to foreign investors, without any restrictions on
the repatriation of capital and profits. Decree No.
32 also allows Turkish citizens to buy foreign securities.
Real
persons and legal entities residing abroad (including
investment trusts and investment funds abroad) can
freely purchase and sell all sorts of securities and
other capital market instruments.
A foreign institutional or individual investor should
use a Turkish intermediary institution for securities
activities. (Such as, buying and selling securities,
repo, reverse repo, portfolio management, investment
consultancy, underwriting, margin trading, securities
lending etc.)
Also a foreign investor can hedge currency risk by
trading at ISE Derivative Market.
Foreign
investors' share of domestic debt has more than doubled
on an annual basis, from 4% in May 2004 to 9% in May
2005. Coupled with a strong local appetite for Turkish
Lira denominated assets, the ample foreign flow triggered
a hasty rally in the local bond market.
Foreign
investors' increased participation
in the ISE also confirms the increasing appetite for
the Turkish market. From an average 54% in 2004, the
share of securities under custody in the ISE that
are held by foreign institutions has increased to
64% in May 2005, mainly through private placements.
The
Istanbul Stock Exchange compound index increased by
almost 48% in US$ terms in 2004 and ISE became the
seventh best-performing market among those of the
25 emerging-market countries.
In
2005, the Istanbul Stock Exchange was one of the fastest
growing stock markets in the world with the index
closing the year at 39,770.70 against 24,971.68 at
end-2004, a rise of 59.3 per cent.
In
2007, the Istanbul Stock Exchange was again one of the fastest
growing stock markets in the world with the index
closing the year at 55,538 against 39,117 at
end-2006, a rise of 42 per cent, and ISE became the
fifth best-performing market among emerging-market countries.
Istanbul
Stock Exchange (www.ise.org)
Turkish
Derivatives Exchange (www.turkdex.org.tr)
