Economy in Turkey: “Can the stock market tree carry 8 million leaves?

An article by Seref OĞUZ, a prominent economist and thinker, on the latest situation in Istanbul Stock Market

“Necip Fazıl, a Turkish poet, says, “The leaves were fed up with the branch, autumn was the excuse.” This expression seems suitable to describe today’s stock market and initial public offerings (IPOs). The stock market’s excuses include war, elections, and crises. However, the stock market does not have a strong enough trunk to carry 8 million leaves. The amount of money coming to the stock market is more or less predictable.“

“Since the beginning of the year, no IPO has resulted in losses. Moreover, every IPO gains almost a 10% premium in the first week. Such sweet profits are attracting investors like a honeycomb. People rush to the stock market IPOs with the hope of guaranteed returns after pooling a few kuruş. After cryptocurrencies, IPOs have become an alternative leg for investors.

DISAPPOINTMENTS LEAD TO DISTANCING

There is a group of people who are used to constantly winning with IPOs. When they start experiencing losses, they won’t be able to enjoy it as they used to, in which case panic will follow. On the other hand, we are heading towards monetary tightening. There will be a squeeze there, and realizations will increase. So, even if they come for IPOs, those who want to build up some savings need to think a bit more.

KIDS’ POCKET MONEY IN THE STOCK MARKET

While institutional investors increase their money using various methods, young people are pouring their pocket money into the stock market. In the latest IPO of Tab Gıda, 4.9 million investors’ demands were met. The number of participants was the highest ever in an IPO.

TWO QUESTIONS, TWO ANSWERS

What will happen to a stock market nourished with pocket money, when the pocket money is cut off? What they will do is shake off and move away from the stock market. Until new investors take their place, we will experience ups and downs. There will be those who are upset, those who lose, those who win… In the end, the stock market will reach its natural flow.

WILL FOREIGNERS COME?

They will, but later… They are not sure because, despite trusting the new economic management, they cannot be sure if the new management will be kept in place or removed (dismissed). The memory of Naci Ağbal  (a former Central Bank Governor) syndrome is still in their minds, and they are constantly worried about whether a new negative surprise will happen. This keeps foreigners away from the stock market.

NOTE: ALTERNATIVES ARE WAITING IN AMBUSH

Gold and silver are waiting in ambush. Money is sort of accumulating energy for safe havens. Inflation is high, but an uncontrolled flow, makes the channels where money rises, risky. Investment instruments are being tested not only for their risks but also for the financial literacy skills of new participants.

It seems that the IPO frenzy will continue for a while. So, what will the regulators do during this period? Perhaps, also they should do the thinking required. Can/should every company go public on the stock market? Is there a need for an education scale for the 8 million investors? We will see…

But what I know is this: the tree of this stock market, with its weak roots and slender trunk, cannot carry 8 million leaves for a long time… Nourishing the trunk and roots will take more time…”

Many thanks to Mr. Şeref OĞUZ, a prominent economist and thinker on the latest situation in Istanbul Stock Market
Original link in Turkish: https://www.ekonomim.com/kose-yazisi/borsa-agaci-8-milyonluk-yapragi-tasiyabilir-mi/712915