Turkey: Borsa Istanbul


John Lunt in front of Borsa Istanbul

Borsa Istanbul (Turkey’s equity, derivatives, and precious metals exchange) sits on a large, beautiful campus in the Northern part of Istanbul.  My dad, Larry Lunt, and I had the opportunity to visit with Onur Sar at the exchange.  Turkey is the world’s 17th largest economy, and it has more than 76 million people.  Turkey boasts a rich, long history as an economic power.  Its strategic location has made it a historical bridge between East and West.  Government and industry leaders are positioning Borsa Istanbul to become key regional financial center.

It is worth noting that banks have played a central role for corporations and individuals in Turkey.  Capital markets have taken a back seat for both lending and saving.  For example, Turkey’s Market Cap to GDP ratio is between 27%-37%.  As a comparison, India’s ratio is around 75%, and the United States has a ratio over 100%.  This suggests that there is room for financial participation to grow as Turkish financial markets grow and evolve. 

Turkish people have been more comfortable investing in real estate than investing in stocks, and real estate prices (particularly in Istanbul) have boomed.  As a side note, this is a pattern that we have seen in other emerging markets.  As people accumulate wealth, they put it in the bank.  The next phase seems to be investing in property, sending it higher.  Once prices cool or even decline, assets flow into equity markets (read the blog posts from China for more description of this cycle).

Some additional interesting facts about Borsa Istanbul:

  • It is in the top 10 among European exchanges ranked by trading volume.

  • Foreign investors account for 63% of the market cap but only 24% of the trading volume.

  • It was the first exchange to launch a private market, matching private investors with private companies.

John Lunt, Onur Sar, and Larry Lunt

The market cap of the exchange sits at around $270 billion.  Assets are growing, but a 10% decline in the Turkish Lira in 2015, along with a declining stock market makes assets appear flat in U.S. Dollars.  The exchange has a goal of $1 trillion in market capitalization by 2023, which is the centennial of Turkey.  The government is creating a variety of incentives to increase listings and to position Istanbul as a global financial center.

Onur walked us through the new trading floor (it has not been officially launched, so we will not be sharing pictures of this area).  NASDAQ owns a 5% stake in Borsa Istanbul, and it is clear that the exchange is serious about technology.  Istanbul is strategically positioned in the world, and after our visit, we believe that Borsa Istanbul is just as strategically positioned in global financial markets.


Special thanks to Brennan Staheli, Kailey Battaglia, and the Lunt Capital team for their contributions to this report.