Over 7 million investors in the Turkish Stock Market raise concerns among economists
The number of investors in the Turkish stock market is surging, causing concerns among economists. According to data released by the Central Securities Depository (MKK), the number of investors in the stock market has increased by 173.2% since the beginning of the year, reaching 7.14 million as of September 11th. This year alone, 32 companies have gone public, raising 42 billion Turkish Liras (TL) in investments. However, a prominent economist warns that this situation, while attractive to small investors, carries risks for the broader population, potentially leading to a financial crisis.
Turkey’s policy interest rate stands at 25%, but according to the August data from the Turkish Statistical Institute (TÜİK), inflation is at 58.9%. This 33.9-point gap between the policy rate and official inflation figures has led investors to seek alternative investment options, including gold, foreign currency, and especially the stock market.
The latest MKK data reveals that the number of investors in the stock market exceeded 7.14 million as of September 11th, with 882,800 new investors joining in the past 11 days. Since the beginning of 2023, the stock market has seen an influx of 4.5 million new investors.
Economists are closely monitoring this surge in stock market activity with concerns. They fear that a crisis may be imminent if the policy interest rate aligns with official inflation figures, causing a significant market downturn. Same economist shared a cautionary tale, stating that when even a shoe-shiner starts asking about stock market trends, it might be time for seasoned investors to exit the market.
He believes that those who engage in high-volume trading will protect themselves, leaving the general public with minimal investments exposed to a potential financial collapse.
He also pointed out that many companies going public had problematic balance sheets, with high debt ratios relative to their capital. He emphasized that if one of these companies were to fail, it could create a negative perception that undermines the entire system.
The economist further argued that when real interest rates turn positive, the stock market will lose its appeal. He suggested that the government was intentionally directing investors toward the stock market by imposing extra taxes on foreign currency purchases, making it challenging for investors to deviate from this path.
In conclusion, he criticized the Capital Markets Board (SPK), the institution responsible for granting permissions for public offerings, suggesting that if SPK approved such offerings, it should provide assurances against fraudulent activities and market manipulation.
