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Securities Market In Turkey

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SECURITIES MARKETS

IN TURKEY

Most of the world's stock exchanges have fairly humble beginnings. Some were formed as voluntary associations meeting in public places, such as coffee houses and the like. Others braved the elements and brought buyer and seller together on the `curb` or, in New York's case, `under a buttonwood tree`. A few had more organized origins, with statutory constitutions to direct their workings. But whatever the location, they were formed in response to an increase in the number of people anxious to dispose of some short of financial asset and of buyers prepared to put their savings into them. Even the earliest forms of market conferred on users the essential benefits of reducing the time, trouble and cost of looking for a buyer or seller. (The Securities Market, W.A. Thomas, 1989)

Stocks and bonds are bought and sold in two kinds of marketplaces: Primary markets and secondary markets. Primary market is that a market where firms sell new securities issued publicly for the first time. The important aspect of the work of the primary market is to ensure that savings are directed toward the most productive or profitable use, that is, the market should be `allocatively` efficient. Secondary market is that a market where subsequent owners trade previously issued shares of stocks and bonds. Without a secondary market asset holders would not be able to get the best returns or satisfaction from their portfolios.

Well than, "What is a securities market?" Securities means that stocks, bonds, options, futures, commodities and shares in a company. Securities markets is that a market of the values, where you can purchase bonds, stocks and other securities. (Business Today, Michael H. Mescon, Courtland L. Bovee, John V Thill, pg. 487) There are two types of securities markets:

1) Public sector securities

A- Government bonds are borrowing instruments with minimum maturities of 12 months. Zero-coupon government bonds are sold at a discount in auction held by the Treasury.

B- Treasury bills are zero-coupon instruments, with maturities of up to one year, which are sold either by public offering or at regular auctions held by the Treasury.

2) Private sector securities

Corporate bonds are securities issued by corporations. The upper limit of issuance is determined by the following parameter. Corporate bonds can be issued in various denominations, which must be even equal values. Commercial paper is generally used for short-term corporate finance and is sold at a discount. Commercial paper can also be issued in various denominations, with even equal values. (Istanbul Stock Exchange (2003) Turkish Bond Market, Istanbul)

And how could securities markets come to days? The origin of an organized securities market in Turkey has its roots in the second half of the 19th century. The first securities market in the Ottoman Empire was established in 1866 under the name of "Dersaadet Securities Exchange" following the Crimean War. Dersaadet Exchange also created a medium for European investors who were seeking higher returns in the vast Ottoman markets. Following the proclamation of the Turkish Republic on the ruins of the Ottoman Empire, a new law was enacted in 1929 to reorganize the fledgling capital markets under the new name of "Istanbul Securities and Foreign Exchange Bourse."

The early phase of the 1980's saw a marked improvement in the Turkish capital markets, both in regard to the legislative framework and the institutions required to set the stage for sound capital movements. In 1981, the "Capital Market Law" was enacted. One year

later, the main regulatory body responsible for the supervision and regulation of the Turkish securities market, the Capital Markets Board based in Ankara, was established.

A new decree was issued in October 1983 foreseeing the setting up of securities exchanges in Turkey. In October 1984, the "Regulations for the Establishment and Functions of Securities Exchanges" was published in the Official Gazette. The regulations concerning operational procedures were approved in the subsequent extraordinary meetings of the General Assembly and the Istanbul Stock Exchange was formally inaugurated at the end of 1985. (http://www.ise.org/about/history.htm)

G&G OTOSAN, whose position in Turkish Automobile Sector is very important, was established at the year 1959. In that time, there were not lots of choices in Turkey and autos were not as much as comfortable like today's autos, automobile sector is not pleasant. However, in the world automobile sector was getting bigger and bigger and it was impossible not to be envy. We decided that we should join this sector and would announce our name all the world. So we did! To days, there are 4 foundations in Turkey: 1) In Istanbul, there is produced middle commercial vehicle SP 450 and little commercial vehicle SP 300. 2) In Bolu, there is produced lorry and motor. 3) In Sakarya, there is Serves and Spare Part Department, which is the biggest centre of spare part in Turkey. 4) In Ankara Balgat, there are Marketing and Financial Serves sections. Furthermore, there are lots of vendors, services in the world: In Belgium, in France, in Japan, in Azerbaijan...exc. At the end of2003, G&G Otosan is comprised 47.350 employees, a local distribution network of over 10.000 dealers and an overseas presence that includes 29 companies and 42 offices in 23 countries.

Economical Growing of G&G

G&G Otosan has manufactured 114,503 vehicles in 2003, which was 136% above the 2002 figures. With an export figure of 75,159 and a revenue of 776 million Euros, G&G Otosan had first highest export revenue in Turkey. Including local and export sales, G&G Otosan achieved a total vehicle sales figure of 137,631 and a revenue of 1,817 billion Euros, exceeding the 2002 revenue by 151%.

For 2004, G&G Otosan expects a production volume of 195,000 including SP 300, SP 450 and Cargo. With an export estimation of 135,000, an export revenue of 1.25 billion Euros is expected. In addition, the total sales objective for 2004, including the imported cars adds up to approximately 225,000.

Due to fluctuation economy in Turkey, investors had not enough demand to securities markets. Especially, after the February 2001 economic crisis, economy got very bad.

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