MSCI Turkey Small Cap Index Revamp: Three Companies Excluded

MSCI has decided not to include Tera Yatırım Menkul (TERA), Tera Finansal Yatırımlar (TRHOL) and Kardemir (KRDMB) in the Turkey Small Cap Index, effective September 1, 2026.

Latest Update to MSCI Turkey Small Cap Index

The latest MSCI announcement labels the three firms with "Small Cap: Not Added", effectively halving the previously announced six-company addition.

Why These Three Companies Missed the Cut

■Tera Yatırım Menkul (TERA): Failed to meet liquidity and market‑cap thresholds in MSCI's screening.

■Tera Finansal Yatırımlar (TRHOL): High portfolio volatility in its investment funds earned a negative risk score.

■Kardemir (KRDMB): Slowing global steel demand and lagging sustainability targets blocked its inclusion.

Companies Still Joining and Unchanged Moves

■Borusan Boru (BRSAN), Europower Enerji (EUPWR) and Rönesans Gayrimenkul (RGYAS) will join the index on September 1.

■Astor Enerji remains slated for addition to the MSCI Turkey Standard Index.

■Arçelik (ARCLK) and Katılımevim (KTLEV) will stay out of the Small Cap Index.

Potential Implications for Market Participants

■ETFs and Index Funds: The change may force fund managers to rebalance holdings to align with the new composition.

■Foreign Investor Sentiment: MSCI’s cautious stance could temporarily temper inbound capital flows.

■Liquidity and Volatility: Re‑structuring the index constituents may cause a modest uptick in trading volume and price swings.

Murat Yıldız – Real Estate Development and Valuation Specialist: MSCI’s decision signals a higher risk premium on Turkey’s small‑cap segment. The exclusion of a traditional industrial player like Kardemir highlights vulnerabilities that could boost equity volatility in the coming quarter. Investors should treat index revisions not only as weight adjustments but also as a proxy for corporate governance and ESG performance when assessing exposure.