Racing Turkish Stock Market IPOs Also in Super Boom

Funding Scale Surpasses Both UK and Germany

As the Turkish stock market shows strength, the initial public offering (IPO) market is also experiencing an unexpected boom. With abundant liquidity and an increasing number of companies going public, Turkey's IPO market size has surpassed major countries such as the UK and Germany.

According to Dealogic on the 24th (local time), 30 companies have raised $1.9 billion (approximately 2.52 trillion KRW) through IPOs on the Istanbul Stock Exchange just this year. In terms of funds raised, this exceeds the IPO scales of major Western European stock markets such as London ($967 million) and Frankfurt ($1.1 billion). Foreign media have evaluated that "the Istanbul stock market is rapidly emerging as one of the world's top 10 IPO markets."

[Image source=Reuters Yonhap News]

The Borsa Istanbul (BIST 100), the top 100 index by market capitalization on the Istanbul Stock Exchange, surged about 36% in local Turkish lira terms, showing the strongest performance among emerging market stock exchanges. As major indices continued their upward trend, local Turkish companies also continued to challenge IPOs. Typically, when stock trading volume increases, the IPO market also becomes more active.

Most of the companies listed this year are retail-focused domestic firms. The kebab franchise Baydener recently raised $14 million through its IPO, and the large conglomerate affiliate Kale Seramik raised $101 million.

The stock price rallies of newly listed companies are also boosting investor sentiment. According to market research firm Refinitiv, among companies listed on the Istanbul Stock Exchange over the past two years, those included in the BIST 100 index have seen their stock prices surge by an average of over 550% in Turkish lira terms. This far exceeds the BIST 100 index's rise of 300%.

Foreign media interpret that the stock market has become rich in liquidity as investors increasingly turn to equities to offset the impact of the plunging lira exchange rate amid prolonged inflation. Despite soaring prices, the central bank's maintenance of low interest rates for an extended period has made the stock market a refuge for funds.

The IPO boom was led by retail investors. In the case of Kale, which went public this year, 79% of the total public offering shares were taken up by individual investors, while institutional investors and employee stock ownership plans accounted for only 20% and 1%, respectively.

According to the Turkish Capital Markets Association, the number of stock investors in Turkey currently stands at 5.1 million, more than quadrupling since early 2019. During this period, the share of individual investors in the entire stock market has doubled to 38%.

Tun? Yıldırım, head of institutional sales at Istanbul investment bank Unlu & Co, said, "Many domestic investors prefer to park their funds in stocks along with purchasing tangible assets such as automobiles and real estate amid high inflation."