Global Financial Markets and Turkey Market of Capital Investment

Global Financial Markets and Developments in Post - Crisis

* Post-crisis recovery process

- The increasing role of governments (to inject liquidity into the markets)
- Interest rates to come down to the lowest levels in history
- Liquidity turn to the abundance of the stock markets

* Increased budget deficits

- EU support packages

* The high volatility of financial markets

* More stringent regulation and surveillance

- Close cooperation between international institutions more rapid recovery in emerging markets.

Turkey: Post-Crisis Economy Emerging period

-Strong banking sector.
-Effective working in the presence of the regulatory supervisory authorities.
-High capital adequacy ratios.
-The public deficit to GDP ratio of Maastricht Criteria to be below.
-Structured products and derivatives have a limited number.

Conjuncture of Turkey

- S & P, Moody's and Fitch upgraded the credit rating of Turkey.
-  Organisation for Economic Co-operation and Development (OECD) Report of 2010 growth forecast to 8.2 % in Turkey and also in the future of the G-20 countries is expected to take place at the beginning of the fastest-growing economies.
- Turkey 2 of 2010 quarter grew by 10.3 % over the same period the previous year, had taken first place in the world.


Turkey Capital Markets Overview

* Funds would be free movement

* Transparent Markets

* Electronic Public Disclosure Platform

- Accounting and general arrangement of regulations in international perspective
- IFRS since 2005.
- Corporate Governance Index from August of 2007.
- The envisaged changes in the Turkish Commercial Code.

* Advanced Market Infrastructure

- International standards-compliant legislation
- A strong and competitive in a technological infrastructure.

Important developments in the Istanbul Stock Exchange (ISE)

- The best performance in public offerings since 2000.
- As of November 30th, 2010 the number of shares in the Initial Public Offering (IPO) of the company in 2010 is 19.
- As a result of public offerings in 2010: 2 billion Turkish Lira contributed to the Turkish economy and company.
- On the other hand, 10 pieces in 2010 by issuing bonds and notes, provided the source is the amount of 740.5 million Turkish Lira.


Other important developments in the Istanbul Stock Exchange

* The National

- The restructuring of the market and the markets.
- Market maker system and the application of the single price.
- Opening session application
- Public Disclosure Platform
- Warrant and other structured products
- City index (9 cities)

* Regional

- In common with Athens Stock Exchange index: GT-30 (28 September 2009)
- FEAS Indexes (3 June 2009)
- Continuing work on establishing a new index within the OIC.


Istanbul Stock Exchange New Market Areas

* Corporate Products Market

- Continuous auction market maker.
- Auction and the "One-Price Method".
- ETF' s venture capital and real estate investment trusts and other structured products.

* Emerging Business Markets

- Recorded by Capital Markets Board, but the companies that our Stock Exchange listing requirements.
- One price and market making.
- The mechanism of the market consultant.

* Qualified Investors Export Market

- Equity securities traded companies, and representatives borrow Bonds and Bills Market.

International Activities

- "Eurasian Union of Stock Exchanges" (Federation of Euro-Asian Stock Exchanges - FEAS) Presidency

- "The World Association of Stock Exchanges" (The World Federation of Exchanges - WFE) Executive Board Member.
- "The European Federation of Stock Exchanges" (Federation of European Securities Exchanges FESE) noble membership (06/23/2010)
- "Economic and Commercial Cooperation of the Organization of Islamic Conference Standing Committee - the COMCEC," which is implemented under the leadership of studies undertaken within the framework of the "Islamic Stock Exchanges Forum Countries" in Istanbul is home to the meetings since 2005.
- Greece Stock Exchange and launched ETFs axis of cooperation, notably Russia and the Gulf countries in the region and also planned.

The World Economy

Global economic conditions are very effective. Because competition is increasing day to day. Even countries are competing. So economy complex concept. In this manner the main issue is to focus on the goal. If you focus to target, you will be successful. Rapidly changing economic and political structures today. Nevertheless, we are working successful in our goal and we should be careful.


Even large interdependent economies. For example China and U.S.A. have got large percent economic trade. They have got strong ‘’ currency-product ‘’ relations. If these are missing one of the, it will be unbalanced. And one factor will affect the world economy. Because the world economy reacts to quickly. There are many things about the future of each country will do. Reason of the economic crisis of 2008, all countries experienced panic. The world lived effective 2 in a global crisis. First one was in 1930, second and last crisis was in 2008 on October. There was fear that the financial system will collapse.


1997-98 was the Asian crisis. Crisis in developing countries was constantly. But the last crisis was about developed country. For this reason this affect the all over the world.
The first global crisis was in 1931-32. That was disaster. The unemployment rate rose to 30%.the Totalitarian ideologies provided their interests. Nazism, communism...
1930-40 in Turkey had got strong crisis. And this time period Turkey closed economy and there was tight fiscal policy. Ismet Inonu kept out the Turkey second world war. This strategy was right and very important step for Turkey future.


U.S.A., European Countries, Japan, China and European countries and G-20 countries did many important economic policy to their home countries.
- Intervention in the financial system.
- Expanded the monetary policy. Interest rates in developed countries approached to 0. It was prevented with abundant supply of liquidity. Financial sector reform was initiated.
- Expansionary fiscal policy.
The world economy has experienced in recent years, the greatest stagnation. Developing countries were afraid the crisis will affect the themselves. The IMF' s money-making power was multiplied by 3. Developing countries left the crisis quickly. Recovery was rapidly. Crisis in South Asia and India have never been. China has 10% rising rate. Growth was 8% in India. The average growth rate in developing countries more than 3 times. This is better than developed countries.


G20 countries, April 3 , 2009 meeting was important in London. And 3 main subjects were determine:
- Cost of the expansion policy
-  Liquidity in the monetary policy  and  continued the interest rate is 0
- Finance regulation
- Fiscal policy must be compatible with all countries.


In 2009 ; 2 quarter,  the crisis stopped and the growth has began. Herewith, production has increased. Stocks improved. Negative growth of Turkey because of the psychological panic. When the panic over again continued growth. Public debt ratio increased in developed countries. Greece small country for this reason a narrow tax base. Public debt crisis occurred  in Greece. Developed countries have government debt and pose a problem. There were large public deficits in developed countries. In the United States unemployment rate is currently 9.5%. And it is long-term unemployment.
There is social pressure in Europe and  already high unemployment in Europe. There is also fear of the growth will decrease. Monetary policy was successful and it has stopped the panic. In real terms interest is negative rate, zero. 0 of the nominal interest rate and it does not fall under this number. The state, treasures can buy bond directly. But it has a limit. There are a lot of liquidity in the market.
Does the liquidity preference or trump?


The fiscal policy expanded. US budget deficit was 11%. The border of fiscal policy.
Developing countries continues growth. China 10 %, India 8 % , Turkey 7 %. These are rapid growth number of countries. And In addition this countries the economy of Brazil  improving.
These countries constitute 65 % of the world economy:
- United States
- European Countries
- Japan
The remaining 35%: creates the developing countries.
The share of developing countries are small. For this reason they are not affect the world economy.
If US has a growth, it will affect the all over the world.


There are 3 important factors for the world economy


- First one is ‘’ Create the Coordination and Common Policies ‘’
Principally; countries should work together. Each country's shouldn't think to own interest. Collective policy is ideal for it. Everyone cannot  increase the their net profits. Because our world has got limit. We are living only this planet. We can't exports the others planet or space. USA and Europe would not be different policies. Each country must be effective supervision and support.


- Second essential step is ‘’ Eliminate Uncertainty ‘’
The unemployment rate is surplus and also have increase debt. Households and companies want to know the tax rate for 4-5 years. If you do not say the tax rate, it will be uncertainty. Investment and consumption are reduced. Exchange rate policy and fiscal policy must be together. USA has got very low interest rates on government bonds.The most important issue is the health care system in USA. Because it has got the largest gaps. Market and policy are creating panic in the USA.
United States of America should reduce the money spent to defense. China and Germany should support domestic demand.


- Finally, third subject is ‘’ Income distribution ‘’
Ethical, political, social, and justice should be equal. Inequality makes unhappy society. Income distribution and macroeconomics have a direct relationship. The upper tier is very rich of an income distribution. U.S.A., China, India and Asian Countries have got this situation. European Countries has got different case.


In USA,1972, 1 % of the population have got 9 % revenue. Now, this percentage is increase the 24 %. In addition, 0.1 % of the population; they have got 11 % on the revenue.
Percentage of the households in China: 36 % and the share of the labour is 40 %. That have effective demand. Household have got many debt in the USA. China constantly trying to export. China has less demand in the domestic market but they have a lot of demand in foreign markets. This name is demand imbalance. Strong corporation do not have the problem of financing.
Productivity is increasing. But balanced household,increase in revenues and wide-growth balanced are the most important factor. We need sustainable growth.


* Causes of crisis in the USA:
- Excessive borrowing
- Liquidity
- Real Estate Sector
- Political Structure


For long-term savings, we should increase the savings rate. Financial regulation is the first step for the achievement.We must move long-term.

Global Crisis and the Turkey Economy

Economic fluctuations, business cycles. Source of recession financial shock.
- Failure to follow the fast growing public debt.(Greece)
- During the crisis, the expansion of the application and the wrong timing of monetary policy on financial output. Stock market is the leading indicator for recessions.
- The rapid increase in commodity prices creates a balloon.
- Lack of adequate financial arrangements.

Developed countries, indicates that the economic regime.

* In the global crisis, these countries continued growth:

- Austria
- Indonesia
- India
- Poland

We have got 3 shape for economy

First one is ‘’ V ‘’ . It is meaning : Fast an increase and fast a decrease.
- Turkey, Brazil, Mexico, Russia

Second symbol is ‘’ U ‘’ .  It is meaning: balanced.
- United States of America, England, Japan, Canada

Finally, last one is ‘’ L ‘’  . It is meaning: surge soft and long.
- Euro-zone

2008 crisis is a global crisis. Foreign countries are trying to apply the unsustainable policies. Financial Stability Policy didn't take a control. In the crisis unemployment rates of production is checked. U.S. at the moment the crisis did not complete. Gross national product is rising but the unemployment situation is still complex. Post-crisis unemployment in Turkey is low to high value. Policy inconsistency cause of the crisis. Turkey did not catch to industry we are already agriculture society. When Turkey have a shock, immediately unemployment is rising. And the unemployment rate does not fall after the crisis. Growth and cyclical situation affect each other.
Korea is still growing up were not affected.
Among the 20 largest economy in the world in 2009 with 18% unemployment, the highest country is Spain. And 14% with the second highest unemployment is Turkey in the world best 20 economy.

Example of the successful countries in crisis measures

* South Korea

South Korea has a comprehensive crisis plan. Economic crisis began in 1997. And South Korea has  taken package of measures in March of 1998.
Crisis package contents:
- Employment Protection
- Employment  Creation
- Vocational Training
- Job Placement
- Social Insurance

* Argentina

Argentina did in industry reform. Production with new technology. They have applied unemployment insurance. This reform influence 200 thousand people. Finally unemployment benefits have paid.

* Norway

Norway have a low unemployment rate. They have got employment project. In 1988, there was crisis. In 1993 the crisis was over. There was much unemployment. This crisis influenced more than 50 years people and recent graduates. Technology evolved, the state supported. Depending on the individual and the company has made the system.

What happened to the Turkey in crisis?

*  Domestic demand and consumer confidence has collapsed

- Distributed to the import quantity
- Investors fell
- Foreign trade deficit and shrinking volume


Unlike the 2001 crisis improved exports.
This crisis has got economic problem at the same time it has got social and economic problem.
- Public revenues collapsed
- Increased spending
- Budget deficit increased to 5.5% from 1.8% of national income

Autonomous income beyond. Investment, more influenced by expectations. Investment collapsed due to deterioration of expectations.
In the crisis domestic demand is decrease and producers tend to export. But this crisis is global for this reason internal and external market collapsed. In the Global crisis(2009), we couldn't apply the financial discipline. Public sector increased. However, budget deficit increased. Turkey began to decline early than others country. Turkey began to slow down from 2004. In the Global crisis(2009) Turkey narrowed 4.7  . The world is more narrowed. External deficit is not the problem. Because goods imported from low-reserve. The share of the public is less, it is marginally. Net export position and investors are important.

Turkey's main 3 problem:

- Employment
- External deficit
- Budget structure / balance


Labor-intensive, capital and information industries obsolete. China, India, Bangladesh can be better.
Motivation in domestic demand in Turkey so it is created external deficit. This is not sustainable.
Out of the United States, the others developed countries have got joint capital and joint export.
In 1970 and 1990, Turkey had budget problem. Always the problem of balance. In 2001, the budget reform has been beneficial.

Employment in Turkey

	2002	2009
Agriculture	34.9 %	24.7 %
Industry	18.5 %	19.4 %
Construction	4.5 %	5.9 %
Service	42 %	50 %

No real increase in agriculture in national income, not growth. It has the wrong policy. Service sector is rising better than industrial sector in the world. We are fast emerging as the industry growth. Industrial sector is high, but the service sector is low.

* Economic growth and employment should also increase

- The structure of exports
- Re-designed exchange-rate policies
- Although Turkey's share of world trade volume is growing less
Exchange rate; the external deficit relevant. Domestic demand increases so imports will increase. In this way that the external deficit will increase. If Turkey's foreign debt is cheap debt. Is to get rid of problems in the economy.
1- Energy
2- Rate
3- Inner growth

* Increase the public' s money

- The rapid increase in domestic consumption / If this is import, we won't take a tax on import
- Privatization


* Voluntary Policies

- Loose monetary policy / tight money, format changes
- Serious increase in current transfers
Under inflation is the increase in tax revenues. The share of national income taxes by 19%. It is a low figure. In Turkey there is the Special Consumption Tax. Dependent on import tax revenues. The share of national income, spending 19%

* General Effects of the Crisis

- Political effect / Reduction in voting power
- The social impact. Unemployment and deterioration in income distribution
- That the economic impact
- The basic strategy is a change in the public sector
- Private sector is gain experience from the crisis
- Learning the many unknowns
- The social impact of the increase in unemployment

* Post-Crisis Results

- There is a fundamental change in economic policy or strategy
- Flexible system / Exchange rate system limited intervened
- Fiscal discipline, monetary policy focused on inflation target
- Stability-oriented strategy, not growth


* The crisis will do this reform in the future

- Grew up in productivity growth
- Transformation of the sector and the private sector's investment preferences
- Structural transformation in the public sector.


Those exports were affected by the crisis. Debt crisis and inflation appeared.labor organization and democracy are important. After every crisis, politically challenging period.