Turkish Market Soars, Even on the Street : Stocks: The exchange began accelerating last August after Turkey fully opened its exchange to foreigners. Since then, it continues to rise.

A sack of stock certificates lies half-empty in a dingy coffee house opposite Istanbul’s Stock Exchange.

“Stocks? Like tomatoes you know, I sell them like tomatoes,” said the shabbily dressed “bagger”--one of many unofficial traders who buy and sell stocks out on the street.

The bizarre street trading that goes side by side with the official stock market would shock Western brokers.

But enthusiasm for Turkish stocks has spread fast since Istanbul’s once-sleepy stock exchange took off last year, growing faster than any other equity market in the world.

The official stock index rose by more than 1,000%, according to a survey by the International Finance Corp., an arm of the World Bank.

Out on the streets, in what is known as the “coffeehouse exchange,” baggers buy stocks through brokers and then resell them to eager investors, sometimes at a 10% premium.

The coffeehouse trading is not official, but it is legal. The baggers--part of a vast and varied network of street merchants who hussle Turkey’s alleys--trade long after the exchange shuts at midday.

An Anatolian peasant, his worldly cash wealth wrapped in a newspaper, makes his way through the shoving crowd to the bagger. Stocks quickly change hands on top of a car trunk.

Hundreds of Turks crowd the muddy back alleys behind the exchange, overjoyed by a rally that began accelerating last August after Turkey fully opened its exchange to foreigners.

The market index of 50 primary companies hit a record high of 4,195 on Feb. 9, against 373.93 at the end of 1988.

The 50-share index then eased to 3,797.14 by Feb. 19, but traders anticipate that further buying will lift it up again soon.

The base of 100 was computed in 1986.

Last year’s rise was almost five times that of inflation-plagued Argentina, where equities yielded the second highest worldwide return, and eight times that of Thailand, which took third spot.

“The Turkish stock market has performed way above every other market,” said one international investment banker who asked not to be named. “Its long-term prospects are bright.”

Average daily trading value, which hovered near $85,000 just a year ago, has soared to $30 million this month--above that of Portugal, Greece, the Philippines and Chile, but still tiny to with Taiwan, South Korea and Malaysia.

The boom is being fed by foreign cash as well as by local investors, who win meager returns on the traditional Turkish standbys of gold and foreign currencies.

Among early outside investors were Morgan Stanley Asset Management and Salomon Brothers, which last December launched an $84-million Turkish Investment Fund.

On Tuesday, the closed-end mutual fund was off 12.5 cents at $13.875 on the New York Stock Exchange, while the Dow Jones industrial average fell 45 points at 2,590.

“People have seen the great potentials of emerging markets,” said Giles Vardey of Salomon Brothers. “We have a big interest in country funds, including the Turkish Fund.”

Other funds, institutional players and wealthy individuals followed suit, and the exchange’s foreign relations director, Ismail Kovaci, said more large banks and securities houses were planning to invest in Turkey.

Heavy demand outnumbered the volume of stocks put on the market by Turkish companies. Most companies are family-owned and prefer to retain the bulk of their stock to keep control of the company.

Although high stock prices have encouraged some private Turkish companies to open up to the public, few others are expected to copy them in the short term.

“In countries like ours, most companies have a passion for possession,” said broker Yener Kaya. “We can see a mentality of the feudal landowner even in Turkey’s very big holdings.”

Kaya’s clients range from the top five holdings of Turkey to a drummer of the old gypsy suburb of Istanbul.

In his office, potential investors line the walls, squatting on the floor.

The government plans to cash in on the stock boom and will sell chunks of stocks from Turkey’s multibillion-dollar privatization program to raise money.

Officials say stocks from state-owned petrochemicals giant Petkim and public bank and textiles conglomerate Sumerbank will be issued soon.