Turkey Seeks Boost to Istanbul as Financial Hub

Monday, 17 November 2014

Turkey is planning a public sale of shares in Borsa Istanbul, home to its $262 billion stock market, by the end of next year as it seeks to entice investment to its financial capital.

The government authorized the initial public offering of as much as 42.75 percent of Borsa Istanbul in a decision released on Nov. 14. The plan comes after the exchange brought the country’s equity, debt, derivatives, and precious metal markets under one roof following a 2012 restructuring. Nasdaq OMX Group Inc. (NDAQ) is part-owner of Borsa Istanbul.

While Turkey has the largest equity market in emerging Europe after Russia, it may have more room to grow than some of its peers. The bourse’s stock-market value was 29 percent of gross domestic product last year compared with 40 percent for Russia and 120 percent for South Africa, according to data compiled by Bloomberg. The Borsa Istanbul 100 Index has advanced 20 percent in 2014, compared with a 1.2 percent decline in the MSCI Emerging Markets Index.

“Bringing more stakeholders to the exchange is part of the government’s plan to promote and develop the exchange and turn Istanbul into a financial center,” Tolga Koyuncu, chief executive officer of HSBC Securities in Istanbul, said by e-mail at the end of last week. Borsa Istanbul has been “getting ready for this almost for two years,” Koyuncu said.

The Turkish Treasury may sell its Class B shares by the end of next year, with a possible extension of as much as one year, the government said last week. Nasdaq OMX bought a 5 percent of Borsa Istanbul in 2013 with an option to raise its stake to 7 percent.