Market Scene : Where Stocks Go Whirling Like Dervishes : Get ‘em while they’re hot in the Istanbul Exchange, which outperformed all others in ’89. But if you’re looking for buttoned-down Wall Street niceties, forget it.
In middle age, Hasan Erol drifted into the wondrous world of Turkish high finance with great experience in quilt-making and tire-repairing. Now he is “The Professor,” shrewdly riding a get-rich-quick bubble in a gambler’s annex to the world’s most breathtaking stock market.
Most mornings, a big chunk of the professor’s million-dollar stock portfolio, bearer shares in come-on hues of blue, red and green, lies on the table before him in a smoky cafe not far from the storied Golden Horn.
The Professor, who keeps careful research notes in coded Arabic script, is a respected pillar of Istanbul’s Over the (coffee) Counter Market.
There is also an Over the (auto) Hood Market in Istanbul, where what is most heard on the street is the din of hundreds of self-proclaimed briefcase brokers jostling with walkie-talkies and cellular phones to buy and sell--but mostly to buy, buy, buy. Cash on the barrel. Instant settlement. Take your shares home, or sell them around the corner. The blues are good today, and get ‘em while they’re hot. They’ll be up 10% by this time tomorrow.
Don’t laugh.
The wild and woolly Istanbul Stock Exchange outperformed all others in the world in 1989. The average price of major stocks gained about 500%. So far this year, the market is up another 48%.
For 12 months through last February, the market rose 700% in dollar terms, according to the International Finance Corp., an arm of the World Bank.
“I advise people to think of the long term, but there are many gamblers,” said The Professor, who searches out good buys by studying company balance sheets. This, mind you, is hardly Wall Street-quality research in this rapidly expanding, flexible-rules, capital-hungry, taxes-shy nation of 55 million people. But it pays off.
“We bought one stock for 2,500 lire and sold it eight months later for 18,000. Not bad, huh?” boasted Mehmet Agirnas, an Erol associate who came to the broker’s life with a stake earned in construction work in Saudia Arabia. One dollar buys about 2,500 Turkish lire right now, but Turkish inflation is around 70% a year.
Overall, exchange volume is only about $20 million a day on about 80 listed companies, and up to 15% of the trading is handled by legal but oh-so-irregular street dealers like The Professor and his friendly competitor Kodri Kalabalik, also known as “The Bard” for the songs he composes to match market conditions.
“O, the prices rise, the people buy, and so our briefcases grow light,” the Bard crooned at the Bourse Cafe one recent morning, clutching a wad of cerise-toned bearer shares in a steel company.
The exuberant Istanbul market is only four years old, but average turnover has increased 100 times from a year ago in the wake of a government decision to allow foreign investment in the market. Already the exchange is bigger than its counterparts in European Community members Greece and Portugal, and it is emerging as a major catalyst for Turkey’s rapid modernization.
“We are becoming an important capital market; new companies are listed weekly,” said Emin Catana, a senior exchange official whose nickname for the trading floor is “The Mosque,” because “you trade and you pray.” The waiting list for a seat on the exchange is 2,000 names long.
For now, the exchange is as light on rules as most big Turkish companies are on accounting niceties: There are no restrictions on insider trading, although some are projected.
Bizarre things happen. So far this year, a terrorist, presumably a leftist, was killed by a bomb he was attempting to place at the exchange, and officials have been embarrassed by the discovery of up to $15 million in counterfeit certificates for stock in a major company.
“In an emerging market where net gains of 10% per day are not uncommon, you have to expect these kinds of things,” said Ismail H. Kovaci, an exchange spokesman.
Kovaci’s office window at the headquarters of Turkish capitalism normally overlooks the Bosporous, but one recent morning the view was entirely obstructed by a giant red-and-gold hammer and sickle on the stack of a Soviet cruise ship berthed across the street.
Until the terrorist attack, the exchange trading floor was open to all, accommodating as many as 2,000 people at a frenzied two-hour morning session before old-fashioned, handwritten bid-and-asked boards.
Now the floor is off limits to all but the employees of 98 registered brokers. The briefcase brokers work in the street outside, reading an electronic ticker in a swirling mob that stops traffic and is the first bit of Turkey that befuddled Russian tourists encounter as they march down the gangplank in search of the phony designer jeans that are another face of ebullient Turkish capitalism.
“We are a new, unsophisticated market, but we are moving quickly toward maturity,” Kovaci said.
An electronic, suburban exchange is in prospect by year’s end, which may put an end to the street market. Unless, with a Turkish sense of adventure, some briefcase brokers go door to door in what some think might be the market’s next great boom.
“In Turkey, it is the women who administer family treasuries, which are traditionally kept in gold,” Kovaci said. “Now if the housewives were to move into stocks. . . .”
On the street, nobody talks of tomorrow. The market is thin, demand far exceeds supply, the bull is charging. One street trader, who buys and sells up to around $150,000 on the spot, is a professor of business administration at a big Istanbul university in the quieter part of his day. His colleagues are retired bureaucrats, former jewelers and currency traders, all men, most of them fiercely mustachioed, with bright eyes and quick fingers.
Among them, Yalcin Yurtkuran is called “The Dentist,” because he is one. “I can make 20 times more here than filling teeth,” he said, selling a visitor one share in a metalworking company--a soft green, nicely embossed--for 18,000 lire.
In the cafe around the corner, The Professor fingered the certificate and offered to buy it for 17,500 lire.
It is an appropriate spot for such commerce--a seedy old coffee bar where, until a few months ago, sailors met to play ancient Turkish card games of luck and cunning with names like “Grab and Run” and “I Am Your Friend, but I Fool You.”
Taking Stock
Percent change of a representative selection of stocks from various countries during 1989, based on prices in U.S. dollars. Australia: 5.6% Austria: 101.1 Belgium: 13.7 Britian: 17.8 Canada: 21.4 Finland: -11.2 France: 34.2 West Germany: 43.9 Hong Kong: 3.4 Italy: 17.3 Japan: 1.3 Netherlands: 31.4 New Zealand: 7.5 Singapore/Mal.: 40.2 Sweden: 30 Switzerland: 24.5 Turkey: 486.9 United States: 26.9
Source: Morgan Stanley Capital International
