One of the most important elements necessary for stocks to be preferred more as an investment instrument by investors in Turkey, is ‘confidence.’ Investors, who have been alienated from the stock exchange for years, should be attracted to stock market again by establishing sound confidence.
Why doesn’t the number of investors at our stock exchange increase enough? Why isn’t there enough demand although there are many companies desiring to go public? Why do investors, who bought stocks through public offerings, tend to sell them at the first trading day? Many similar questions can be asked…
In fact, we omit the most important element that is necessary for the solution of these problems: confidence in the stock exchange… In order to solve other problems, first we need to ‘inspire confidence.’ Confidence in the stock exchange has been heavily damaged because of the seizure also of small investors’ stocks, while public companies and bankswere seized by the state.FirstlyDemirbank, Yaşarbank, Sabah Yayıncılık, Medya Holding, EGS Holding, and then Aktaş, Çukurova and Kepez, and 400 thousand investors and approximately US$ 500 million have left the stock exchange.After this blow, thousands of investors who got fed up with market collapses, manipulations, and fraudulent activities by some companies have become angry with the stock exchange.
“Past mistakes should have been repaired”
For angry investors to make peace with the stock exchange, it was necessary to repair past mistakes. And later on measures that can prevent these investors from suffering damages should have been developed. In our meetings with SPK (Capital Markets Board)Chairman Mr.Vedat Akgiray, we got the impression that the new capital markets law may focus on such events. Meanwhile, compensation of investors’ past losses will also be added to agenda with this law.
The government has actually stood aloof from stock exchange so far, but together with initiatives for “Istanbul Financial Center” it also intends to set hands to such problems from the past.If problems are solved with the new law, I believe that the number of stock exchange investors will rise to at least double the current level. The government actually does not need additional resources to ensure this; giving non-paid up shares through Ziraat Bankası will solve the problem. This move will also facilitate the bank’s going public which has been postponed due to the lack of demand.
When investors direct their savings to the shares of proper and decent companies and hold these shares for 3 to 5 years, they can obtain enormous yields. We still have such companies. The greater this number is, the higher is investors’ awareness. But there should be state intervention in cases of negative examples. Because people first see and hear about negative examples. Have you seen any positive news about the stock exchange recently?
“Whoever is responsible should be severely punished”
Companies intending to go public should be toldclearly that the stock exchange is not a place for robbery and that they cannot steal the money they collected there and go away. At companies which have set a bad example, those responsible should be severely punished. There are companies that have come to the brink of bankruptcy after they lent money to the controlling shareholder’s companies and could not collect these debts…How have these companies found themselves in these situations although they had been leaders in their industries, free from debts and evenhad sizable assets, and why haven’t they done what was needed at the time? Controlling shareholders have to know that they shouldn’t damage the company and investors while fighting among themselves.
Negative examples cause all companies on the stock exchangeto be perceived similarly.Investors wait for paid capital increases at companies following the sales by controlling shareholders. They see manipulators as the only factor behind the rise of the share price. For every company, there are scenarios like “the boss is ill-intentioned, he will collaborate with manipulators and there will be paid capital increase later.” It is not me who says this, they write these lines on stock investors’ forums. When bad examples increase in number, decent companies suffer from this as well. It is time to get rid of such bad examples, otherwise the situation will come to unpreventable points.
“Conscious investor and institutional investor are utterly important”
Unlessinstitutional investor base develops and investor awareness reaches a certain level, these problems can be solved through punishment only to some extent. When even those companies that have gone public and raised funds cannot entrust their money to investors, it means there is a flaw in this system. Isn’t it also ethically wrong for these companies to carry out repo transactions with the money they have obtained from this system, instead of leaving it to professionals? Wouldn’t it be better to invest at least a small portion of the money in portfolio management companies, or funds?
When investors direct their savings to the shares of proper and decent companies and hold these shares for 3 to 5 years, they can obtain enormous yields. We still have such companies. The greater this number is, the higher is investors’ awareness. But there should be state intervention in cases of negative examples. Because people first see and hear about negative examples. Have you seen any positive news about the stock exchange recently?
Ali Bahçuvan / Economist