Societe Generale SA or GLE is going to resume the commentary on Turkey after they reviewed the new legislation of the country. This new legislation threatens of imprisonment up to 5 years for a few types of commentary in the markets. This legislation is part of the Capital Markets Law of this country which was enacted on 31st December, 2012. This calls for punishment of people who give wrong, untruthful or misleading information to the investors. Additionally, the law disallowed any sort of rumor starting or providing news, commentary or creating reports that can have an influence on the stock prices. Incidentally, Commerzbank AG and Bank of America Merrill Lynch are still reviewing that how this law will impact their ongoing business in Turkey.
The Departmental Head of Emerging Markets Strategy of Societe Generale, Benoit Anne stated that this new law will not have any impact on the general research activities of the company and hence they can comfortably cover the markets just like they have been doing for all these years. During the review process of the law, the company refrained from making any comments on the Turkish markets.
According to a strategist of Turkiye Halk Bankasi AS, Isik Okte, the new legislation is expected to put a hold on market manipulation; however, it may reduce the quality of financial information that is available to the investors. The officials of the Capitals Markets Board in Ankara declined to make any comment on this matter though. Okte added that the information providing companies will become more cautious on what to say and what to not. Certain news can influence the market heavily and if that happens, the corresponding economist or strategist may need to end up inside a jail.
Incidentally, Turkey’s laws restricting free expression kind of intensified in 2012. Numerous international companies criticized the Government and Prime Minister Recep Tayyip Erdogan harshly for imprisoning most number of reporters in the entire world.
However, Slim Feriani, who works as the Chief Investment Officer for the Advance Emerging Capital Ltd., stated that the Turkish policy makers may not necessarily be trying to put any restriction of the institutions. Rather, it may be implemented just to stop people from manipulating the security prices by providing some sort of misleading information. Julian Rimmer also echoes similar views and believes that the law may just have been badmouthed.