MSCI Freezes Certain Index Changes in Turkish Stocks
Due to concerns over market integrity and free float rates, MSCI announced that it has suspended certain index changes in Turkish stocks.
Global index provider MSCI announced that it has decided to temporarily freeze certain index changes for Turkish equities, stating that Turkey's status could be reassessed if sufficient progress is not made by June 2027.
Background of the Decision
Index provider MSCI announced that it has decided to temporarily freeze certain index changes for Turkish equities. It was stated that the decision will take effect immediately and remain valid until further notice.
Investor Concerns
In the statement made by MSCI, it was noted that within the scope of the 2026 Market Classification Review, institutional investors have serious concerns regarding potential coordinated transactions that could be carried out through shares owned by funds closely affiliated with certain small-scale publicly traded companies in Turkey.
Emphasis on Reliability
It was emphasized that these transactions could negatively impact market integrity and the reliability of calculations regarding the free float rates of stocks.
Expected Steps
MSCI stated that in order to address these concerns, companies must share detailed and timely information regarding ultimate beneficiaries, and effective oversight and enforcement mechanisms against coordinated transactions must be established.
It was also expressed that a transparent and rules-based system is expected to be established to identify securities whose free float structure has been disrupted.
Current Regulations
It was noted that Turkish authorities implemented various regulations following these evaluations. However, MSCI pointed out that the steps taken are still in their initial stages.
Scope of Application
Within the scope of the implementation, MSCI will not apply increases in Foreign Inclusion Factors or Number of Shares, no new stocks will be added to the MSCI Turkey Investable Market Index, and transitions between size segments will not be allowed.
Future Assessments
MSCI stated that if sufficient progress is not achieved by June 2027, additional measures regarding Turkey could be evaluated.
In this context, it was indicated that the possibility of reclassifying the Turkey Indexes from their current Emerging Markets status to Frontier Markets or Standalone Markets status may come to the agenda.