Turkey Stock Market Valuations and Expected Future Returns

Updated at Sun, 12 Jul 2020 20:30:06 -0500
Country: Turkey (updated daily) check out Global Overview for detailed methodology.

Ratio of total market cap over GDP: Maximum - 128.97%; Minimum - 15.1%; current - 19.63%
Expected future annual return: 17.4%

ETF Used for dividend yield: TUR (Yield=1.97%)
Market Index used: BIST 100
Current Annual GDP: $622 billion US dollars or 4,273 in billions of national currency (GDP in Local Current Prices Annual Growth=10.52%)
Data since year 1992


Turkey Historical GDP Growth

Historical GDP of Turkey in billions of national currency. The GDP in local current prices has grown at the annual rate of 10.52% over the past 8 years. Please note this growth rate includes the effect of price inflation and it is NOT the real GDP growth rate. Current Annual GDP: $622 billion US dollars or 4,273 in billions of national currency.

Turkey GDP (Billion, National Currency)

Historical Stock Market Cap

Historical total market of Turkey in billions of national currency. This value is normalized using the data published by WorldBank. BIST 100 is used for the normalization. Use BIST 100 as index, data goes back to 1993. Annual GDP data from IMF, back to 1980, in billions Turkish Lira.

Turkey Total Market Cap (Billion, National Currency)

Historical Ratio of Total Market Cap over GDP (%)

The current ratio of total market cap over GDP for Turkey is 19.63%. The historical high was 128.97%; the historical low was 15.1%. If we assume that the ratio will reverse to the recent 10 years mean of 29% over the next 8 years, the contribution to expected annual return is 4.95%. This is the detailed historical chart of the ratio.

Turkey Ratio of Total Market Cap over GDP (%)

Predicted and Actual Returns

From the equation presented on the U.S. market valuation page,

Investment Return (%) = Dividend Yield (%) + Business Growth (%) + (Re/Rb)(1/T)-1

We can compute the predicted and actual returns of the Turkey stock market over a given time period, T. In the calculation, we set T to equal eight years, the approximate length of a full economic cycle. The calculated results are presented in the chart below. The green line indicates the expected, or predicted return if the market ratio trends near the recent 10 years average ratio of 29% over the next eight years.

The blue line indicates the actual, annualized return of the Turkey stock market over eight years. We use “BIST 100” to do the actual return calculation. We can see the calculations largely predicted the trend in the stock market as the blue line is closely parallel to the green line.

Predicted and Actual Returns of Turkey

Conclusion

The stock market of Turkey is expected to return 17.4% a year for the coming years. This is from the contribution of economic growth in local current prices: 10.52%, Dividend Yield: 1.97% and valuation reverse to the mean 4.95%.

This is the projected return of the stock market in Turkey relative to other countries. Click on each bar in the chart to go to other countries:


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