Türkiye’s stock market sees record investor inflow spurred by IPO boom
The Turkish stock market is enjoying a record surge in new investors, lured by an unprecedented momentum in initial public offerings (IPOs) this year, as companies seeking fresh financing alternatives look to tap locals’ appetite for new listings.
The number of companies that went public in the first half of 2023 reached 22, according to Central Securities Depository (MKK), with many more waiting in line to get listed. The firms raised about TL 26.4 billion ($974.14 million) in total in the first-half IPOs.
The pace is seen as the main driver spurring some 537,000 new investors to join the stock market within a span of just 15 days as of Aug. 15, according to data by MKK on Wednesday. The inflow brought the total number of equity-holding individuals to a new peak of nearly 5.64 million, compared to almost 5.1 million on July 31.
Experts attribute the increase to recent regulatory adjustments by the Capital Markets Board (SPK), aimed at encouraging greater participation in initial public offerings and boosting investor engagement.
This year’s listings have already surpassed those of last year in both dollar and local currency terms.
In 2022, there were 40 IPOs worth about TL 19.3 billion, compared to a record of 52 listings in 2021, according to the Borsa Istanbul Stock Exchange (BIST) data.
The drive this year has been backed by the surge in new account openings, propelled by the aspiration to attract more significant amounts of capital.
The increase in investors’ appetite comes amid stubbornly high inflation and as the government has been orchestrating a U-turn away from policies based on interest rate cuts that had been accompanied by a steep fall in the Turkish lira and soaring prices.
Foreign buying spree
After winning another five-year term in May, President Recep Tayyip Erdoğan overhauled his economic administration, spearheaded by the naming of respected veteran Mehmet Şimşek as treasury and finance minister.
Şimşek has said increasing the predictability of economic policies was one of the main goals in order to attract foreign investment into the country.
Extending their buying spree, foreign investors purchased a net $139.7 million of local stocks in the week ending on Aug. 4, according to the latest Central Bank of the Republic of Türkiye (CBRT) data.
It marked a ninth consecutive week of inflows, with purchases in that period nearing almost $2 billion. The series marked the longest run of net investments since January 2013.
Chaired by its new governor, Hafize Gaye Erkan, the Turkish central bank has reversed and hiked its policy rate by 900 basis points to 17.5% since June to address inflation, and vowed to continue gradual monetary tightening.
The annual rate of inflation, as measured by the consumer price index (CPI), leaped to a 25-year high above 85% in October last year but subsequently eased to as low as 38.21% in June.
It rose again to nearly 48% last month due to the lira’s decline and various tax hikes and officials have acknowledged it would rise further toward the year-end.
