Critical process officially begins: International market warning for Turkey

International index provider S&P Dow Jones Indices (S&P DJI) has published a notable assessment regarding the Turkish capital market. The institution warned that if issues in the areas of market access and transparency are not resolved, Turkey's current "emerging market" status could be downgraded to the "frontier market" level.

MARKET ACCESS AND TRANSPARENCY UNDER MONITORING

In a statement released overnight, S&P DJI indicated that it is closely monitoring structural issues affecting market access, particularly transparency in stock ownership, as well as the steps taken by regulatory bodies.

The statement noted that if current conditions worsen, a special procedure could be established for Turkish assets, and it was recorded that if the issues are not resolved within the next year, Turkey could be downgraded from the "emerging market" category to "frontier market" status in the next review.

MSCI HAD ISSUED A SIMILAR WARNING

A similar assessment regarding Turkey was also made last month by international index provider MSCI.

MSCI stated that international investors have concerns that the free-float ratios in Borsa Istanbul are being artificially increased through coordinated transactions, and announced that if new regulations are not implemented by November, a formal consultation process regarding the Turkish market could be initiated.

INDONESIA ALSO ON THE LIST

S&P DJI drew attention to the possibility of a downgrade not only for Turkey but also for the Indonesian market due to deficiencies in transparency.

While classifying countries as developed, emerging, and frontier markets, the institution bases its criteria on the protection of minority investor rights, regulations affecting capital inflows and outflows, market liquidity conditions, and the accessibility of securities transactions for investors.

News Source: 12punto