Is the stock market returning to an era of 'fewer price ceilings' for IPOs?

The monetary expansion brought about by the support measures provided during the COVID pandemic, both globally and in Turkey, led to long-term rallies in stock markets. In Turkey, Borsa Istanbul experienced one of its golden eras as it became the only alternative due to low interest rates and suppressed foreign exchange rates, alongside monetary expansion. This rise in the stock market also whetted the appetite of companies to go public. The gains that investors, who turned to the stock market due to a lack of alternatives during Turkey's experimental monetary policy period, made from companies that went public and performed well, also attracted investors who were unfamiliar with the stock market to this market.

In 2023, 56 companies went public, with total proceeds reaching 79.8 billion Turkish Lira, or 3.3 billion dollars in dollar terms. In the last 3-year period, the number of IPOs reached 143, while total proceeds amounted to 120.2 billion Turkish Lira, or 6.9 billion dollars.

However, recent developments signal that the golden era experienced in IPOs for approximately 3 years is coming to an end. In December, 5 of the 7 companies that went public fell below their IPO price.

With the tightening policies implemented in the economy, deposit interest rates exceeding 50 percent, and uncertainties regarding how the inflation accounting to be applied in 2024 will affect company valuations, it appears that a more cautious period will be experienced in the stock market. The stance that foreign investors will take as confidence in economic policies increases is among the most decisive factors in 2024.