Turkey's growth performance has boosted foreign interest in the stock market. Net inflows increased by nearly four times, exceeding $2.2 billion since the beginning of the year. The index ranked second in returns in the world.
Borsa Istanbul, which completed 2016 with an increase of 8.9 percent as well as a net foreign inflow of $630 million despite the Gülenist Terror Group's (FETÖ) treacherous coup attempt, geopolitical risks and uncertainties in the global economy, almost made history in the first half of 2017. As incentives provided by the government to stimulate the economy, particularly the Credit Guarantee Fund (CGF), started bearing fruit, foreign interest in Turkish markets, which grew by 5 percent in the first quarter, multiplied.
In the 25-week period since the beginning of the year, net foreign inflows to Borsa Istanbul increased by 243 percent compared to the same period of the previous year, exceeding $2.2 billion and thus realizing the highest six-month foreign exchange inflow since 2012. Borsa Istanbul has become the world's second rising market at 28.5 percent since the beginning of the year. With a net increase of about four times as well as a rise in the index, the share of foreign stocks has risen to the highest level since April 29, 2016, at $48.3 billion. Foreign shares in Borsa Istanbul also exceeded 65 percent, reaching the highest level in 20 months.
Foreign interest in Turkish markets was not limited to just stocks. Net purchases by foreign investors in the bonds and bills market during the first six months of this year increased by 81 percent compared to the same period of last year, reaching $3.6 billion. The foreign bond-bill portfolio, on the other hand, has achieved the highest level since Nov. 11, 2016, with $31.4 billion.
While the growth rate is expected to exceed 5 percent in the second quarter of the year, the application of the Credit Guarantee Fund has been positively reflected in the profitability of the banking sector. The sector raised its net profit by 60 percent to TL 17.5 billion ($4.8 billion) in the first four months of this year. In the stock market, the rise in the banking index reached 31.7 percent. Foreigners realized the highest net purchases in the first five months of this year with $227.2 million in Garanti and $211.1 million in İş Bankası C shares.
Analysts said the optimistic atmosphere for developing countries continues, drawing attention to the fact that Turkey is positively diverged, while also benefiting from this momentum. Noting that the surge in the exchange rate has been suppressed as well as the high growth data, analysts stressed that the growth expectation for the second quarter is also positive and that it will also be reflected in company balance sheets. The index, which is trying to hold over 100,000 points, is expected to go up to 106,000 points in the short term.
In the stock exchange, which has risen by 28.5 percent since the beginning of the year, the total market value of companies has increased by TL 168.3 billion from TL 584.9 billion to TL 753.2 billion. The company with the highest market value on the stock exchange was Garanti Bank with TL 11.7 billion, followed by Koç Holding with TL 11.6 billion and Akbank with TL 11.1 billion. The number of companies that exceeded the market value of TL 10 billion due to the rise in the index reached 25 for the first time in the history of the stock market.
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