Stock exchange

The peak was in April 2010 when BIST 100 was at its highest in USD terms. After Bernanke spoke in May 2013, it has been heading south as trend. Yes, it is cheap by that metric.

But then it has a long history of being cheap in USD terms. Any movement north has been short-lived thus far. Today as novelty the composition of holdings has also changed.

MSCI spread has peaked again. Turkish stocks are sold at 62% discount relative to EMs, one of the highest negative spread since 2008. The spread was positive 20% by January 2013.

Besides non-residents are now holding only 52% of the index. Residents’ share increased because non-residents have sold, but also residents are increasingly holding small caps.

MSCI noted investability and restricted accessibility issues, and mentioned Frontier or Standalone Markets status. Short-selling and stock lending bans didn’t go unnoticed.

There is a possibility that developed stock markets may also adjust downwards, but the Turkish case is different. For years analysts looked for signs of alignment with Dow etc.

This is so international institutional investors jump in. If institutional investors shy away from a stock market, it would be hard to keep stability with small plays alone.

Stocks can perform well for an extended period after a massive shock. After 2008, this is what happened. Yet only small caps and non-institutional plays wouldn’t do the trick.