The year 2023 was not easy for Borsa Istanbul; election uncertainty, earthquakes and wars were effective on the indices, while the tight monetary policy implemented after the election accelerated the exit from the stock market. On the other hand, the insurance index rose the most by 166.41 percent and the mining index fell the most by 18.95 percent in nominal TRY terms in Borsa Istanbul.
6 indices gained in real terms
In real terms, taking into account the Central Bank’s end-2023 inflation forecast of 65.03 percent, the BIST100 index lost 18 percent while the banking index gained 5.1 percent. The real return of the insurance index was 61.4 percent, while the real loss in the mining index reached 50.88 percent. In real terms, only 6 indices, namely insurance, stone, soil, cement, sports, trade, banking and liquid banking indices, gained in 2023. Market actors stated that 2024 will be a difficult year, but foreign investor interest and confidence in the economic program give hope.
Banking index up by 73.4 percent
After all these events, the BIS100 index completed the year with an increase of 35.6 percent at the close of December 29, 2023. With the effect of the uninterrupted inflow of foreign investors in the last 8 weeks of the year, the rise in the banking index reached 73.38 percent in 2023. The liquid banking index also completed the year with an increase of 70.36 percent. The banking index outperformed previous years as the fifth highest rising index in nominal TL terms in 2023.
The highest rise was in the insurance index in 2023. While the insurance index rose by 166.41 percent, its return was also high as an index that can reflect the effect of inflation directly on prices and compensate for the loss of customers due to high premiums.
The rise in the stone, soil and cement index for 2023 reached 92 percent. In fact, the pricing that started after the February 6 disaster in cement companies and continued throughout the year had a great impact on the performance of the index. Analysts state that almost 5 years are priced for these companies, while urban transformation and reconstruction activities after the earthquake are enough to keep the index moving. The sports index, which includes only four major sports clubs, stood out as the third-highest rising index with a 91.99 percent rise last year.
The trade index, which includes companies that can directly reflect the inflation effect on their prices, was the fourth highest rising index of the year. The rise in the trade index in 2023 was 90.24 percent. Analysts believe that high inflation is expected to continue until May and pricing in this index will continue accordingly.
Mining and textile index fell the most
There are only 3 sectors in Borsa Istanbul that spent 2023 with nominal losses. The highest loss was in the mining sector with 18.95 percent. Movements in Koza Gold shares played an important role in the change in this index. The second place was in the textile index with a nominal loss of 8.9 percent. The third loser was the electricity index, down 3.16 percent, where negative pricing accelerated mainly in the aftermath of the Israel-Hamas clashes. In real terms, the loss in the mining sector exceeded 50 percent.
Possible rating upgrade may increase foreign appetite
Alper Nergiz, General Manager of GCM Investment, stated in a statement to Anadolu Agency that Borsa Istanbul may follow a fluctuating course with both local and global topics in the new year and said, “We maintain our positive optimistic expectations in the stock market in 2024.”
Nergiz stated that the banking and holding sector may come to the fore with the interest of foreigners, energy with issues such as green energy and zero carbon emissions on the agenda, construction with urban transformation incentives, tourism and aviation sectors with increasing capacity. Nergiz warned to research well and be very selective in choosing sectors and shares.
Nergiz said that the steps taken by the economy management and the new actions taken by international credit rating agencies as a rating increase may increase the appetite of foreign investors. Stating that the level of the exchange rate and gradually increasing interest rates are gradually enabling foreign inflows, Nergiz said, “In this direction, we can say that sectors such as banking, energy, aviation, communication and large companies with appropriate basic multipliers and depth may be more on the radar of foreigners.”
Foreign investors increased by 28.72 percent
The share ownership rate of foreigners in Borsa Istanbul, which has been below 30 percent in recent years, increased by 28.72 percent in the whole of 2023. Most of this increase took place in the last quarter of the year. The foreign share in Borsa Istanbul reached 38.01 percent. According to Central Bank data, foreign investors have been continuous net buyers in the stock market for the last 8 weeks. In these 8 weeks, they realized a net purchase of USD 1.9 billion. Since the beginning of the year, as of the week ending December 22, foreign investors made a net inflow of USD 1,35 billion in the stock market.