BİST watch-list market grows at alarming rate
The watch-list market isolates firms in a designated zone of the stock market and keeps them under close surveillance with their shares only traded for a limited amount of hours. If the BİST board considers the share price of a company to have abnormally increased or decreased, or it notices failures in meeting legal requirements, it has the authority to move the firm to the watch-list market.
The disproportionate surge in this indicator when comparing it with the rise in the overall number of companies being traded on BİST stems mostly from the large number of public offerings that took place after recent reliefs were made in the eligibility requirements for becoming a public company.
The government, after 2006, introduced several remissions for newcomers to BİST in a bid to enlarge the country’s financial market size. Yet, the incentives appear to have generated some negative side effects.
According to annual activity reports released by BİST each year, the shares of five out of 285 publicly traded companies were listed in the watch-list market in 2003. However, the same number soared to 29 out of 386 firms in 2014. That figure rose further to 32 as of this June.
While the number of firms traded on the watch-list increased by 540 percent from 2003 to 2014, the overall number of companies listed on BİST went up by a mere 35 percent in the same period. The number of watch-listed companies was mostly below 10 before 2007, ranging between 10 and 13 until 2012. However, this number rose sharply to 23 in 2013, 29 in 2014, before reaching 32 this month.
On condition of anonymity, a former high-ranking official known for his broad expertise in capital markets spoke to Sunday’s Zaman about the sharply increases. The expert said incentives introduced after 2006 led to a high number of companies rushing to go public, many of which lacked an adequate corporate structure. “About 40 companies rushed to be traded on the stock exchange market back then. As time passed, they failed to meet even the basic criteria required by the stock exchange management,” he said.
Asked if any political intentions lay behind BİST’s decisions, the expert said that is a possibility.
Since April 17, 2015, the shares of Taraf, a leading daily newspaper which has been targeted by many state officials and which has been subjected to several recent tax audits due to its anti-government media coverage, have been traded on the watch-list market.
Similarly, the shares of long-pressured Islamic lender Bank Asya have also been listed on the watch-list market since Sept. 30, 2014. President Recep Tayyip Erdoğan has accused the founders of Bank Asya of having ties with prosecutors and police officers in charge when major corruption investigations were revealed on Dec. 17 and 25, 2013. The sweeping bribery allegations implicated several then-Cabinet ministers along with well-known pro-government businessmen.
Market analyst Selim Işıklar pointed to macroeconomic difficulties, saying the indebted structure of the Turkish economy is the main cause of such a large increase in the number of watch-listed companies. “The firms go public with their debts. Even though they managed to survive for some time, they fail in the end. The absence of good governance is also one of the factors,” noted Işıklar.