With

Egemen Erden

Executive Vice President Institutional Sales & Trading

Q: Given the political risk and volatility in the Turkish markets what are the most attractive aspects of the markets that should be attracting western money managers?

A: Despite the short term uncertainty in politics and challenging global markets, there is no deviation from ’s growth path and the long term prospects for capital markets remain solid. We are confident Turkey will be able to attract investors due to its strong GDP growth potential thanks to demographics, large domestic market and robust infrastructure. With over 76 million consumers and a steadily increasing GDP per capita, Turkey has made great strides in reducing its macro vulnerabilities in the past several years. The result has been a durable rise in investor participation in capital markets and reinforcement of economic fundamentals. Earnings growth in 2014 should be in a positive territory of 3%, quite reasonable even with the current political disruptions. In 2015, earnings growth should be well above 10%, on track for record high levels. Last but not least, the recent volatilities have created quite attractive valuations as stocks trade at 9xPE on 2014 estimates, to the low end of GEMs.

Q: What are the latest most innovative changes implemented on the Turkish equities markets that put Turkey firmly on the map of every fund manager in Western and the US?

A: Nasdaq OMX signed an agreement to bolster Turkey's Borsa and turn it into a major trading hub. Under the partnership agreement, Nasdaq OMX will provide with access to an extensive range of its high-calibre technology and the two will actively collaborate in the region to help invigorate capital markets. The objective is to position Borsa Istanbul as a leading integrated multi- asset exchange and to provide a cutting-edge platform serving issuers, investors and traders globally. Nasdaq has already started working on its acquisition with Borsa Istanbul and started to send patches for the new technology. These ambitious plans will remarkably improve the competitiveness of Turkish equity markets on the global stage. For investors in Turkish assets the advancements will result in faster execution of trades, a greater number market participants, larger trade volumes, increased market liquidity and lower spreads.

Q: If you were to recommend the safest and the most profitable equities in Turkey which sectors would you choose?

A: We believe, retail, telecommunications and insurance will stand out in the current economic and political backdrop as the safest and most profitable sectors in Turkey. Among the retail and telecom sectors and are our most preferred names. Turkcell’s topline growth has been supported by increased mobile data usage and voice. Its EBITDA margin should expand gradually with a higher share of mobile internet revenues and improved operational leverage of subsidiaries www.tradetecheurope.com [email protected] +44 (0207 368 9465

Superonline and Astelit. Meanwhile, Migros delivers the highest sustainable Free Cash Flow yield among all consumer staples stocks in Turkey with 11% yield for 2014E vs. a 6% sector average through strong cash generation and a solid EBITDA margin of 6.5%. It has underperformed due to the bottom line sensitivity of EUR0.9bn debt and the weakness of the TRY. However, BC partners’ potential exit could fetch up to 44% higher than current price levels. In the insurance sector Aksigorta is among the most profitable companies due to its diversified portfolio mix. We expect this to continue through the more effective use of its bancassurance channel (37% CAGR in bancassurance premiums in the last 3 years) as the company shifts to a less motor vehicle-intensive and thus less risky structure. We forecast a 40bps decrease in its combined ratio and a 30% earnings growth in 2014.

Q: A few words about the Turkish market?

A: Equity shares of companies belonging to various sectors, exchange traded funds, warrants and certificates are traded on Borsa Istanbul. Currently 372 companies, 16 exchange traded funds (8 of them managed by Finansinvest), 240 warrants and 92 certificates on the exchange. In 2013 the average daily equity market traded value registered at USD1.8bn while total market capitalization reached USD235bn as of the end of the year. The foreign investors’ share in total market capitalization was at 62.5% at 2013 end.

Egemen Erden has 18 years of experience as a sell-side equity analyst and equity sales specialist working for a number of leading investment banks in Istanbul and London. He is currently managing the institutional equity sales, trading, equity derivatives and quantitative strategy teams at Finans Invest.

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Now in it’s 14th year TradeTech will be taking place at the CNIT La Defense Paris, April 14th – 15th

With almost half of our delegates representing the largest and most active buy side firms in Europe and North America, TradeTech 2015 is the only event in Europe that bring together all parts of the equity trading community to discuss the latest challenges, opportunities and regulatory changes in the industry.

http://bit.ly/1wDACij www.tradetecheurope.com [email protected] +44 (0207 368 9465