SAFAKNA TURKEY- The government has taken steps to heal the wounds of quake-hit investors and prevent the heavy selling that could occur in the markets. All stakeholders in the capital markets took action to support Borsa İstanbul, which lost almost 10% in value in the first two days after opening after the Kahramanmaras earthquakes. Will Borsa Istanbul open? What measures will come? After discussions, a first step was taken regarding the BES tools. Accordingly, the share of funds in which the state contribution to the NPS is invested, which can be invested in the stock market, has been increased from 10 to 30 percent. Thus, while it was aimed at supporting the market with almost 10 billion lira, the Turkish Welfare Fund decided to support the market through a price stability fund. Borsa İstanbul and CMB have announced a number of measures to prevent a possible decline. In order to protect small investors, the steps taken to stop the high-frequency algorithmic transactions that caused controversy in the market and reduce losses in credit transactions were welcomed. In addition, it is expected that the zero tax rates on share repurchases of companies will have a positive impact on demand.
1- The exchange will be marked with BES
The first statement about the warning package was made by BES. According to the decree published in the Official Gazette, the share of funds in which the state contribution to the private pension system is invested, which can be invested in the stock market, has been increased from 10 to 30 percent. Accordingly, the ceiling on investment per share increased from 1 percent to 5 percent. Investment in government bonds fell from 70 percent to 50 percent. Portfolio must be updated within 10 days. According to the regulation, at least thirty percent of the PPS state contributions; Shares in the BIST 30, BIST Liquid Bank, BIST Non-Bank Liquid 10 and BIST Participation 30 indices, as well as in the BIST 100, BIST Sustainability Index, BIST Corporate Governance Index and Borsa İstanbul A.Ş. It will be valued in shares of participation indices calculated by the company. In issuing a statement on the matter, the Insurance and Private Pensions Regulatory and Supervisory Agency (SEDDK) stated that the change in the weight of shares in the public contribution portfolio is a step that will improve the efficiency of the fund and contribute to the deepening of our country’s financial markets. and support a production-oriented economic policy.
2- Taxes on share repurchase of companies are dropped.
Companies whose shares are traded on the Istanbul Stock Exchange will not pay share repurchase tax. After the ruling was published yesterday in the Official Gazette duplicate, companies listed on the Istanbul Stock Exchange will be able to buy back their shares without paying withholding tax, which is currently 15 percent on share buybacks. In addition, the withholding tax rates on distributed company dividends were dropped. BRSA, on the other hand, has stated that shares of publicly traded banks purchased by buyback between February 6, 2023 and January 1, 2024 will not be treated as a discountable equity item.
3-stage for credit transactions from CMB
The Capital Markets Council announced a series of measures to offset investor dissatisfaction caused by the fact that the stock market was not closed on February 6-7. CMB has decided not to take any action until June 30th in the event of default by customers located in the earthquake area as of February 6th, the date of the earthquakes. Accordingly, it was decided not to take any action until June 30th in the event of default by customers in an earthquake area that occurred as of February 6th, the date of the earthquakes. As part of the relevant resolution, until April 10, 2023; The maximum loan interest rate applied by brokerage houses to clients with a portfolio size of TL 1 million or less and the amount they are required to repay in connection with a non-lending purchase order is not deposited on the clearing day. , or the specified amount is not on their accounts with the intermediary organization as of the clearing date. It was decided to make a recommendation to determine the interest rate applied in case of default (in case of default) at a reasonable level, taking into account the cost of the loan resources provided by the intermediary institution.
Simplicity of capital adequacy of brokerage houses
CMB has also signed the capital adequacy regulations for intermediary institutions. Accordingly, until June 30, 2023, in the capital adequacy tables prepared by brokerage houses, the position risk ratio for shares taken in own portfolios is more than 3% instead of 10%, and the position risk ratio for “Other clients” follows a credit account of more than 4 % instead of 8%. The initial capital protection rate, which was previously set at 35%, will apply at 20% until April 10, 2023.
4) Precautions for algorithmic transactions from Borsa Istanbul
In a statement he sent to the Borsa Istanbul Public Disclosure Platform, he stated that a number of new measures have been taken. New measures were introduced, including the calculation of a new index of companies that bought shares in Borsa Istanbul. Accordingly, in the stock market and equity and index derivatives markets under the VIOP, in all capital market instruments with the opening of the Stock Market session, with the exception of commodity certificates, and in all contracts traded in the VIOP; At the opening of the session, it was decided not to allow cancellation of the order, deterioration in price and reduction in quantity. The new measures included reducing order execution speed from 15:1 to 5:1 in the stock market and raising the commission threshold in the stock market from 0.03 kurush to 0.25 kurush. According to the ruling, the stock market cancellation, price reduction and quantity reduction (IAK) fee rates will be increased by 20 percent, and the voluntary cancellation fee rate, which is 1 per hundred thousand in VIOP, will be increased. by 20 percent and will be determined in the amount of 1.2 per hundred thousand. It was also decided to reduce the session end time of all futures and options contracts traded on the VIOP to 18.10 on full business days and 12.40 on full business days. It was also decided to calculate a new buyout index and to remove all measures based on investment instruments that are currently carried out as part of the supervisory activities of the stock market.
5) Turkey Welfare Fund will be activated
He is preparing to support the market through the Turkish Welfare Fund (TVF) Price Stability Fund. Accordingly, state-owned banks, wealth fund companies and SDIFs will invest in the Price Stability Fund under the Turkish Welfare Fund, and the fund will be able to buy shares during periods of high volatility in the stock exchange with this capital. When there are manipulative movements with this source, the shares will be bought on the stock market.
6) Gold imports stopped
In order to mitigate the negative impact of the February 6 earthquakes on the economy and prevent an increase in the current account deficit, it was announced that a decision had been made to temporarily suspend gold imports against goods (conditions). Gold imports through the Borsa Istanbul precious metals market hit a record high in early 2023. According to data from Borsa Istanbul Precious Metals Market, gold imports reached 68,330 kg in January, the highest since records began in 1995. In the same month, silver imports amounted to 73 thousand 77 kg.
10 billion Turkish liras will be received
The founder of Fund Turkey, Onur Duygu, said that changes in the portfolios of funds should be made within 10 days. Duygu said: “When we look at the size of the existing contribution funds and their current shares in the equity portfolio, we can see that there are 24 funds with a total size of TL 51.3 billion and the weight of the shares in the portfolios of these funds. ranges from 10% to 15%. To achieve a portfolio share of 30%, a purchase of approximately TL 8-10 billion is required, given the current portfolio allocation.
It will support the stock market
Ata Portfolio Management General Manager Mehmet Hertz noted that while the timing and purpose of the BES regulation is a matter of debate, it is a positive regulation as a result. Hertz said: “Bond interest rates have fallen to 9%, which means very low yields. This means that the Istanbul Exchange will receive a cash flow of 9-10 billion Turkish liras. He will support the stock market, which is experiencing a panic due to the earthquake. BES funds are long-term, it would be nice to buy shares. Support for certain mechanisms should be welcomed.”
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