Türkiye decision from MSCI

International index provider MSCI has decided to freeze some index changes regarding Turkish stocks until further notice, effective as of October 15.

In MSCI's statement, it was stated that the decision covers certain changes that arise as a result of index reviews or company events.

CONCERNS ABOUT MARKET TRANSPARENCY

MSCI stated that, within the scope of its 2026 Market Classification Review, institutional investors raised serious concerns that coordinated transactions may be carried out through the portfolios of some funds closely linked to certain small-cap public companies.

In the statement, it was stated that this situation could damage the reliability of the calculations regarding the rates of shares in actual circulation and the integrity of the market.

MSCI stated that in order to address investors' concerns, detailed and timely disclosure of ownership information of final beneficiaries, effective surveillance and sanctions against coordinated transactions, and a transparent, rule-based framework should be established to identify and deal with shares whose actual circulation rates are structurally distorted.

MEASURES WILL BE EVALUATED

MSCI stated that the authorities in Türkiye have taken various steps in this process, including a regulation to exclude the shares held by funds whose final beneficiaries are already excluded from the actual circulation account.

However, the statement emphasized that these steps were preliminary and noted that institutional investors expected the implementation of credible and sustainable sanctions against coordinated transactions and the establishment of disclosure standards that allow independent verification of the actual circulation rates of shares in Türkiye.

MSCI stated that these practices should be implemented consistently throughout the market and that additional time is needed to evaluate whether the measures taken provide the structural improvements demanded by investors. The institution also announced that it will continue to receive feedback from market participants regarding the functioning of the Turkish stock market.

SOME INDEX CHANGES WILL NOT BE APPLIED

As part of the freezing decision, MSCI will not increase foreign investor inclusion factors (FIF) or number of shares (NOS). In addition, no new shares will be added to the MSCI Türkiye Investable Market Index (IMI) and upward transitions of shares between size segments will not be implemented.

JUNE 2027 HAS BEEN MARKED FOR STATUS CHANGE

MSCI stated that it will continue to monitor the Turkish stock market closely in terms of the effectiveness of rule changes and imposed sanctions.

In the statement, it was stated that if sufficient progress is not achieved by June 2027, additional measures may be considered, including initiating a consultation process regarding the possibility of switching MSCI Turkey indices from emerging markets status to Frontier Market or Standalone Market status.

It was noted that the application for Türkiye indices will be re-evaluated within the scope of MSCI's 2027 Annual Market Classification Review.