Aydın Seyman Executive Vice Chairman Istanbul Stock Exchange (ISE) Sarajevo October 11, 2011

Transcription

1 The Possibilities of Cooperation Between ISE & SASE Aydın Seyman Executive Vice Chairman Istanbul Stock Exchange (ISE) Sarajevo October 11, 2011

2 2 Source: IMF, World Economic Outlook, April 2011

3 3 Source: IMF, World Economic Outlook, April 2011

4 Growth World s 16th biggest economy (2010) Europe s 6th biggest economy (2010) Accordingto the first quarter growth rates of 2011 Turkey passed China and Argentina with the highest growth rate, 11%, being the only economy with twodigit growth rate. In second quarter, the economy grew beyond the expectations with 8.8%. Price stability Average inflation rate decreased from 71.5% over to 6.7% in August2011. Public finance EU-defined debt stock (% of GDP): 45.5%*compared to 78,7% of Euro Area. The debt stock decreased to 41,6% in *2009, Source: Undersecretariat of Treasury 12,2 Growth Rate (%) 10,2 5,3 Source: TUIK 9,2 11,6 8, Q Q Q Q Q Q ,7 Average Inflation Rate (%) 71,6 11,8 7, May Source: TURKSTAT, CBRT 4

5 Robust banking sector Well-functioning regulatory and supervisory bodies Capital adequacy ratio in Turkish Banking Sector (%) High capital adequacy ratios High credit and asset quality No sub-prime mortgage losses 0,35 0,3 0,25 0,2 0,15 25,1% 30,9% 28,2% 23,7% 21,9% 18,9% 18,0% 20,6% 19,0% 17,0% Limited use of structured products and derivative instruments 0,1 0,05 0 S& P raised local-currency sovereign rating on Turkey to BBB-/A-3, an investable level Source: BRSA 5

6 12,00% 10,00% 8,00% 6,00% 4,00% 2,00% 0,00% -2,00% EU Defined Budget Deficit /GDP(Turkey) Maastricht Criteria 3.7 % 3 % 80,0% 70,0% 60,0% 50,0% 40,0% 30,0% 20,0% 10,0% 0,0% 60.0 % EU Defined Debt Stock / GDP (Turkey) Maastricht Criteria 41.6 % Source: Undersecretariat of Turkish Treasury 80,00% 70,00% 60,00% 50,00% 40,00% 30,00% 20,00% 10,00% 0,00% Annual Inflation Rate of Turkey Maastricht Criteria Source: Undersecretariat of Turkish Treasury 6,24% 2,50% 6 Source: Eurostat& CBRT *June (Year to Year % Changes)

7 Foreign Investment and Current Account Balance(billion US $) Source: CBRT *June (annualized) CBRT Rate & CPI 80 CBRT Policy Interest Rates (%) 70 CPI (Year to Year % Changes) Source: CBRT * Current Account Direct Investment Portfolio Investment ,65 5,75 February-02 August-02 February-03 August-03 February-04 August-04 February-05 August-05 February-06 August-06 February-07 August-07 February-08 August-08 February-09 August-09 February-10 August-10 February-11 August-11 7

8 Capital Market Law (1981) The Regulatory Body- Capital Markets Board (1982) CAPITAL MARKET INSTITUTIONS Capital Markets Board Istanbul Stock Exchange Turkish Derivatives Exc. Istanbul Gold Exc. ISE Settlement and Custody Bank Inc. Central Registry Agency Inc. The Association of Capital Market Intermediary Institutions 8

9 Established on December 26, 1985 Not-for-profit public organisation. Has its own budget Has a General Assembly consisting of brokerage houses and banks Governed by an Executive Council (5 members) Chairman and CEO appointed by joint Government Decree Four members elected by the General Assembly representing banks and brokerage houses Computerized trading systems and surveillance On-line, real-time data dissemination No restrictions on foreign portfolio inflows / outflows 9

10 200 Comparison of ISE 100 with MSCI Indices (1/5/2007=100) MSCI Developed MSCI Emerging ISE 100 (US $) Source: ISE, Bloomberg

11 Total Numb ber as of 08/31/2011 Source: Bloomberg, ISE G-7 Countries Emerging Markets* *: Brazil, China, India, Russia, Polland, Mexico, Malaysia, South Africa, Turkey

12 12 Source: Thomson Reuters Equity Capital Markets Review, 2Q 11

13 (avg) * (avg) Change (%) China Poland Turkey Mexico Russia (avg) * (avg) Change (%) Japan France UK Italy Germany US *: 2011 as of 08/31/2011 Source: Bloomberg, ISE

14 14 (US $ billions) 2011/ Change 2001 ISE Stock Market Number of Intermediaries Number of Companies % 310 Number of ETFs % Number of Warrants Number of Corporate Bonds Total Market Capitalization % 48 Daily Average Trading Value % 0.3 Total Trading Value % 80 Bonds and Bills Market Outright Purchases and Sales Daily Average ISE Trading Value % 0.1 Daily Average OTC Trading Value % 0.3 Total Trading Value (ISE + OTC) % 125 Bonds and Bills Market Repo - Reverse Repo Market Daily Average ISE Trading Value % 2.5 Daily Average OTC Trading Value % 3.0 Total Trading Value (ISE + OTC) 1,578 2,316 2,259 3% 1,392 Daily Average Trading Value (ISE+OTC total) % 6.3 Total Trading Value (ISE+OTC total) 2,350 3,208 2,980 8% 1,598 Source: ISE As of September 23, 2011.

15 ISE MARKETS STOCK MARKET Total 103 Members Clearing&Settlement T+2 BONDS & BILLS MARKET FOREIGN SECURITIES MARKET EMERGING COMPANIES MARKET National Market (237 co.s) Second National Market (55 co.s) Outright Purchases and Sales Market Total 128 Members 88 Brokerage Houses, 40 Banks Clearing&Settlement T+0.T+90 Repo/Reverse Repo Market Total 93 Members 54 Brokerage Houses, 39 Banks Clearing&Settlement T+0.T+7 Offering Market for Qualified Investors Total 128 Members 88 Brokerage Houses, 40 Banks Clearing&Settlement T+0.T+7 International Bonds Market Total 129 Members 89 Brokerage Houses, 40 Banks Clearing&Settlement T+3.T+15 EmergingCompaniesMarket 2 companies Total 103 Members Clearing&Settlement T+2 Watch List Companies Market (13 co.s) Repo Market for Specified Securities Total 60 Members 33 Brokerage Houses, 27 Banks Clearing&Settlement T+0.T+7 Collective Products Market Interbank Repo/Reverse Repo Market Total 39 Members 39 Banks Clearing&Settlement T+0.T+7 ETFs Market(12 funds) 15 Its, REITs, Venture Capital ITs Market (53 listed co.s) Warrant Market (104 contracts)

16 % 39% 40% 64% 66% 65% 54% 54% 52% 54% 49% 43% 41% 72% 67% 67% 66% 62% 80% 70% 60% ly Held Portion Source: Central Registry Agency Inc. 50% 40% Million % % 6% 12% 30% 20% 10% 0% USD % of Publicl Volume Foreign participation

17 17 Exchange Country Index Change (%) Ranking Change (%) Ranking Colombo SE Sri Lanka CSE All Share Tehran SE Đran TEDPIX Lima SE Peru Indice General BVL (IGBVL) Buenos Aires SE Argentina Composite Indonesia SE Indonesia JSX Composite Index The Stock Exchange of Thailand Thailand SET Index Santiago SE Chile IGPA Philippine SE Philippines PSE Index (PSEi) Colombia SE Colombia IGBC NASDAQ OMX Nordic Copenhagen Danmark OMXC Istanbul SE Turkey ISE 100 Index MICEX Russia MICEX Index NASDAQ OMX Nordic Stockholm Sweden OMXS Bursa Malaysia Malaysia FBM Emas Index Korea Exchange Korea KOSPI Mexican Exchange Mexico IPC CompMx Wiener Börse Austria SE Price Index Warsaw SE Poland WIG Total Return NASDAQ OMX Nordic Helsinki Finland OMXH Mauritius SE Mauritius SEMDEX MSCI Emerging - mxef Index NASDAQ OMX - Composite Bombay SE India-Bombay BSE Johannesburg SE South Africa FTSE/JSE All Share Deutsche Börse Germany CDAX Price Egyptian Exchange Egypt EGX 30 Index NASDAQ OMX Nordic Iceland Iceland OMXIPI TSX Group Canada S&P/TSX Composite Oslo Børs Norway OSEBXPR National Stock Exchange India India S&P CNX Tel Aviv SE Israel General London SE England FTSE NYSE Euronext (US) - Composite MSCI Developed - mxwd Index Source: WFE, Bloomberg

18 Total Value of Stock Trading in 2010, billion USD Total Value of Bonds Trading in 2010, billion USD Shanghai SE Shenzhen SE Taiwan SE Corp. BM&FBOVESPA National Stock Exchange India Istanbul SE MICEX Johannesburg SE Bombay SE The Stock Exchange of Thailand Saudi Stock Market - Tadawul Mexican Exchange Bursa Malaysia Indonesia SE Tel Aviv SE Warsaw SE Santiago SE Egyptian Exchange Colombia SE Budapest SE Philippine SE Tehran SE Amman SE Lima SE Colombo SE Buenos Aires SE 411,2 BME Spanish Exchanges London SE Group NASDAQ OMX Nordic Exchange Johannesburg SE Colombia SE Oslo Børs Korea Exchange Istanbul SE MICEX Tel Aviv SE Santiago SE SIX Swiss Exchange Irish SE National Stock Exchange India Deutsche Börse Shanghai SE Buenos Aires SE NYSE Euronext (Europe) Bombay SE Shenzhen SE Egyptian Exchange 445, The 6 th largest traded value in stocks among the emerging markets The world s 8 th largest bonds market Source: WFE Capital markets are highly liquid and appeal to foreign investors 18

19 China-Shanghai Brazil China-Shenzhen India-Bombay India-National Korea South Africa Taiwan Mexico Malaysia Indonesia Chile Thailand Turkey Colombia Poland Israel Philippines Egypt Hungary Source : WFE

20 10,0 9,0 8,0 7,0 7,1 7,9 9,1 7,7 8,0 7,2 6,0 5,5 5,0 4,3 4,0 3,0 2,0 1,0 0,0 2,8 1,9 1,7 1,4 1,2 1,3 0,6 1,0 1,1 1,0 0,8 0,9 1,1 1,0 1,1 1,2 1,3 0,4 0, Stock Market Outright Purchases and Sales Market Repo / Reverse Repo Market 20 Source: ISE As of September 23, 2011.

21 China-Shanghai China-Shenzhen Korea Brazil Taiwan India-National Turkey South Africa Thailand India-Bombay Malaysia Mexico Indonesia Poland Israel Chile Colombia Philippines Hungary Source: WFE

22 BME Spanish Exchanges London SE Group Johannesburg SE NASDAQ OMX Nordic Exchange Colombia SE Korea Exchange Istanbul SE Oslo Børs MICEX Tel Aviv SE Santiago SE SIX Swiss Exchange National Stock Exchange India Shanghai SE Deutsche Börse Irish SE Buenos Aires SE Bombay SE NYSE Euronext (Europe) Source: WFE *OMX includes Copenhagen, Helsinki, Iceland, Stockholm, Tallinn, Riga and Vilnius Stock Exchanges ** Above data do not include repo/reverse repo transactions

23 US $ 50.8billionFunds US $ 50.3 billion Dividends Public Offerings and Capital Increases Cash Dividend

24 Proceeds (Million US$) Number of IPOs Proceeds (Million US$) Number of IPOs *As of September 30, ETFs are not included. 24 Average IPO Numbers /

25 The ISE establishes close ties with TOBB (The Union of Chambers and Commodity Exchanges of Turkey), and local chambers to attract both top 1,000 firms and SMEs. The Initial Public Offering Campaign Istanbul Summit, realized in Istanbul on May 6-7, brought together over 2,200 officials from various sectors. The second IPO Campaign was held in Bursa, on November 23-24, The ISE will continue to organize similar events in other cities of Turkey within the framework of the IPO Campaign. 25

26 Cooperation with international organizations World Federation of Exchanges (WFE) Federation of European Securities Exchanges(FESE) Federation of Euro-Asian Stock Exchanges (FEAS) Organization of the Islamic Conference (OIC) ISE s InternationalStanding: President of the FEAS Board Member of WFE Working Committee Full member of FESE Coordinator of the OIC Member States Stock Exchanges Forum The International Capital Market Association (ICMA) InternationalSecurities Services Association(ISSA) EuropeanCapitalMarketsInstitute(ECMI) International Organizations of Securities Commissions(IOSCO) Participation to Regional Exchanges 26 Baku Stock Exchange (5.5%) Kyrgyz Stock Exchange (24.52%) Sarajevo Stock Exchange (5%)

27 Options Market Stock Repo Market ISE Sustainability Index Project Common index projectswith Deutsche Börse, Egypt, Russia, UAE, etc. 27

28 28 To establish a technology company in partnership Single access point provide an electronic platform to serve as an access point to the Exchanges Position Turkey as a regional center connect Euro-Asian exchanges to the world through the platform Develop an efficient network through which all capital market institutions will communicate with each otherand increase total liquidity in the markets decrease transaction costs in the market integrated risk management and surveillance system centralized collateral management at Takasbank Create an environment where capital and commodities markets grow together by supporting each other

29 IPO Campaign Investor Campaign 29

30 ISE INTERNATIONAL EXCHANGES TURKDEX IGE FEAS EXCHANGES COMMODITY ENERGY 30 BROKERAGE COMPANIES

31 There are several new markets in the ISE: Collective and Structured Products Market ISE Emerging Companies Market Flexible Facilities on Public Offerings ISE Offering Market for Qualified Investors Repo Market for Specified Securities Interbank Repo-Reverse Repo Market Eurobond Negotiated Deals Platform In addition to new markets, development of new instruments in the ISE: ETFs, Warrants, and Dividend Index Strategy and Action Plan for Istanbul International Financial Center (IFC- Istanbul) The vision of this plan is that Istanbul shall first become a regional financial center, and ultimately a global financial center. This project is included in the Ninth Development Plan covering , and accorded top priority and importance by the Government. For this project several committees are formed with the participation of more than 80 public and private institutions. 31

32 Basedon itsalliancewith international organizations, developedstock exchanges, IFC project, developed infrastructureandsignificant experience, ISE is willingtocontribute tothedevelopmentof thesarajevo StockExchange. 32

33 33 Bothto determine how ISE can contribute to the specific needs of SASE and to specify the collaboration areas between two exchanges, a team composed of ISE, ISE Settlement and Custody Bank Inc. and Central Registry Agency visited SASE in July, Specified main problems are: No real IPOs Insufficient investor base Absence of money and repo-reverse repo markets Underdeveloped bonds market Need for a well-functioning public disclosure system and transparency Lack of liquidity Need for revision of the risk management system and high transaction costs

34 Although there is a well-functioning technical trading and clearing & settlement system and the regulations in the capital markets are in conformity with the international standards, the capital markets face some problems. The share of capital markets in the economy is incompetent. In order to strengthen the economy via developed capital markets, more government support is needed. Financial sector is nearly composed of banking. 34 Major structural problems of the capital markets are: insufficient capital accumulation due to high unemployment rate, low income levels and low saving rate lack of awareness and education for financial products

35 The evaluation of the current situation indicates that ISE and SASE can work together to foster the growth of markets. Roadmap towards closer cooperation: Preparation of a roadmapbased on the report of ISE, and organization of road-shows in Istanbul and Sarajevo 35 ISE as the key agent: Incaseof a requestof thegovernment of Bosnia and Herzegovina and the acceptance of the correspondinginstitutions, theinstitutionslikecentral Bank and Turkish Treasury can meet with the corresponding institutions of Bosnia and Herzegovina

36 A workshop to develop bond markets, payment systems, money markets, and repo-reverse repo markets with the participation of several parties including SASE, ISE, regulatory bodies of both countries, clearance and settlement agencies. Especially on bonds market and design of a repo-reverse repo market, preparation of a presentation and roadmap for SASE based on the experience of ISE Improvement of the public disclosure process for SASE Revision of risk management, clearing & settlement process and transaction costs to increase liquidity 36

37 ISE experience on promotion of IPOs and investor base should be sharedwithsase in detail The dissemination of SASE market data by ISE should be evaluated in detail. Providing training and consulting services for RVP, clearing & settlement and central registry agencies in Bosnia and Herzegovina In the long-run enabling mutual access to SASE and ISE stock markets through a possible electronic link that will enable crossborder order-routing would be beneficial to increase the interest in equity markets, especially the SASE. 37