A combination of Turkey embarking on its EU accession process, macro economic stability and declining inflation rates have all created a new playing field for the ISE. Turkey’s efforts to liberalize various sectors, such as petroleum, utilities and telecommunications, are expected to accelerate in 2006. We have already started to see the corporate playing field expand. Turkey recorded record high privatization and FDI inflows in 2005. Although the path to EU membership will be an uphill struggle, it will resolve longstanding structural issues, generate interest and will continue to attract newcomers through FDI and portfolio investments. The CMB and BRSA‘s new measures on corporate governance are also expected to gain ground in the coming years.

Currently, stocks for 300 companies trade on the ISE, with a combined market capitalization of around 55% of Turkey’s GDP. Considering the potential of the economy and the number of sizeable non-listed companies, the number of ISE listed companies could potentially double in the long term.

Liberalization in two crucial sectors - energy and telecommunications - has already started to attract foreign direct investment. All these new companies are candidates for listing on the ISE.

Currently, only a few companies remain in public hands, and account for a mere 1% of the ISE’s market capitalization.

32% of the total market capitalization is floated freely on the stock exchange, while the share of foreign investors in the free float has grown significantly over the last two years, reaching 64%.

Local institutional investors currently only have a very small share in the stock market. However, the growing private pension system is expected to gradually raise the share of local institutional investors in the next few years.