MSCI announced on June 23, 2026, the results of its 2026 Market Classification Review, stating that Turkey's equity market is under close scrutiny due to concerns about market accessibility and the potential for coordinated trading behavior that could artificially inflate free float estimates. International institutional investors have highlighted recurring instances of such behavior involving fund holdings closely affiliated with certain smaller, listed companies. If tangible and credible progress is not observed in addressing these issues by the November 2026 MSCI Index Review, MSCI may launch a consultation on reclassifying Turkey, potentially moving it from Emerging Market to Frontier or Standalone Market status.
While MSCI acknowledged recent steps by the Capital Markets Board of Turkey (SPK) to introduce a framework for excluding certain fund-held stakes from free float calculations, market participants are eager to see the practical impact of these adjustments. Investors are also seeking further improvements, including transparent and timely disclosure of beneficial ownership, robust surveillance and enforcement against coordinated trading, and a clear, rules-based framework for identifying and treating securities with structurally distorted free float. Historically, concerns over market accessibility, including short-selling and stock lending bans introduced in 2019 and 2020, have adversely impacted Turkey's equity market.
Turkey's weight in the MSCI Emerging Markets Index is currently below 1%, and its representation in broader global indices like MSCI ACWI, excluding the US, is near zero. This potential reclassification echoes previous warnings from Morgan Stanley regarding Turkey's market accessibility. MSCI also reminded that Greece would be reclassified from Emerging to Developed Market status at the May 2027 Index Review. The firm continues to welcome feedback on shareholder transparency and trading behavior in markets facing these concerns.
