Global index providers like MSCI are maintaining a cautious stance on Türkiye, emphasizing the need for transparent ownership and reliable free float calculations to ensure market integrity.
Key facts
- •MSCI reversed its August 12 decision to add Tera Yatırım Menkul, Tera Finansal Yatırımlar, and Kardemir B to its Small Cap Index on August 25.
- •FTSE Russell has paused positive index changes for Türkiye while reviewing new methodology from the Central Securities Depository (MKK).
- •The SPK's new free float reform excludes fund holdings controlled by parties related to an issuer to prevent inflated liquidity estimates.
- •A July 23 regulatory decision requires real estate and venture capital funds to be valued by net asset value rather than potentially distorted exchange prices.
- •Restoring market status can take years, as evidenced by Greece, which required 13 years to return to Emerging Market status after a 2013 downgrade.
Global index providers, including MSCI, S&P Dow Jones, and FTSE Russell, have expressed concerns regarding market integrity in Türkiye, specifically focusing on ownership transparency and free float calculations. While Türkiye has not been removed from any indices, providers are closely monitoring the country's reforms. Recent actions by the Capital Markets Board of Türkiye (SPK) aim to address these issues, but index providers remain cautious until these reforms produce consistent, measurable results.
Concerns Over Market Integrity
Index providers are scrutinizing whether Türkiye's stock market prices and ownership structures accurately reflect genuine supply and demand. Concerns center on the 'free float'—the portion of shares available for trading—and the potential for coordinated trading to distort price formation. MSCI recently demonstrated this caution by reversing a decision to add three Turkish entities to its Small Cap Index after receiving investor feedback.
Regulatory Reforms and Future Outlook
The SPK has initiated reforms to improve market transparency, including a new methodology for calculating free float that excludes fund holdings controlled by parties related to an issuer. Additionally, a July 23 decision mandates that exchange-traded units of real estate and venture capital funds be valued based on net asset value to prevent price inflation. Experts suggest that Türkiye's ability to maintain its emerging market status depends on the consistent implementation of these reforms and strengthened enforcement against coordinated trading.
Timeline
- 2013MSCI downgraded Greece from Developed to Emerging Market status.
- July 23The SPK adopted a decision to value certain investment funds based on net asset value.
- August 12MSCI announced the addition of three Turkish companies to its Small Cap Index.
- August 25MSCI reversed its decision to add the three companies to the index.
- November 2026A potential Frontier review for Indonesia is scheduled.
- March 2026Greece's return to Developed Market status was announced.
- May 2027Greece's return to Developed Market status becomes effective.
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This article was independently rewritten by ManyPress editorial AI from reporting originally published by Daily Sabah.
