Actual Circulation Ratios of 6 Shares in BIST Indices Have Changed

Actual Circulation Rates in BIST Indices Updated: New Era for 6 Companies

Borsa Istanbul announced a significant update on the actual circulation rates of stocks traded on the markets, which are one of the critical elements that determine their weighting in indices. Within the scope of this regulation, Bell2 Thermal (#CANTE), Izmir Brush (#IZFAS), Pacific Technology (#PATEK), Pacific GYO (#PSGYO), Polymer Theme (#TMPOL) and Cherry Mining (#VSNMD) Total, including of six shares the actual circulating share ratios have been changed.

These technical regulations, August 27, 2025 will be valid from the date and the new rates will be based on the index calculations. This situation has the potential to directly affect the weightings of these stocks in various indices within Borsa Istanbul (BIST 30, BIST 100, Industrial, Services, Technology, etc.) and thus the investment strategies of passive investment funds and portfolio managers who follow the indices.

What Is the Actual Circulation Rate and Why Is It Vital?

The de facto circulation rate, also known as 'free float' in financial markets, refers to the percentage of shares that can be freely traded publicly within the total issued capital of a company. This ratio includes shares other than shares held by the company's founders, board members, strategic partners, affiliates, or large shareholders with controlling power and are generally not put up for sale for long-term or strategic reasons. Thus, the actual circulation indicates the amount of shares that the market can actually invest and that constitutes liquidity.

The actual circulation rate is used by exchanges such as Borsa Istanbul as a vital parameter in index calculations. When determining the weight of a stock in the index, not only its market value (share price x total number of shares issued) is taken into account, but also the ratio of the actual circulating part of this market value. In this way, the indices more accurately reflect the real liquidity of the market and the investable part of the market, and the representativeness of the index is increased.

This ratio is of great importance, especially for mutual funds, exchange-traded funds (ETFs) and index-based derivatives that passively follow indices. Since these funds form their portfolios based on the composition and weights of the index. A change in the effective circulation rate requires these funds to adjust their positions in the respective stock. This can create significant buying or selling pressure on the respective stocks on the dates when the index changes take effect.

Causes and Market Effects of Changes in Actual Circulation Rates

Changes in actual circulation rates are often the result of various institutional and market dynamics. The main reasons behind these changes are developments that affect the fundamental structure of stock supply and demand:

• Capital Increases and Decreases: Situations such as companies making capital increases at or without cost, the public offering of new shares or the implementation of share buyback programs can affect the amount of shares in actual circulation. In particular, the addition of new shares resulting from a paid capital increase to the public share or the cancellation of the company by buying back its own shares directly changes this ratio.
• Joint Sales and Special Placements: Transferring shares in the hands of company partners or large shareholders to institutional investors through an IPO or through large-scale block sales can increase the actual circulating share. Conversely, the accumulation of a large amount of shares from the market by a strategic partner can reduce the actual circulation.
• Expiration of Post-IPO Lockdown Periods: The expiration of the legal or contractual periods of shares whose sale is restricted (lock-up) in initial public offerings (IPOs) and the fact that these shares begin to be traded on the free market can significantly increase the effective circulation rate.
• Changes in Strategic Partnerships and Partnership Structure: Large-scale changes in the company's partnership structure, mergers and acquisitions, transfers of shares between shareholders can also affect the effective turnover rate. For example, the acquisition of all or a large part of a company can reduce the actual circulation to almost zero.
• Conversion of Convertible Bonds into Shares: The conversion of some financial instruments into shares can alter the total number of shares and therefore the actual circulation rate.

The potential effects of these changes on the markets are wide-ranging and important for both companies' stocks and overall market dynamics:

• Index Weights and Portfolio Adjustments: An increase in the actual circulation rate increases the weight of the stock in the index, while its decrease lowers the weight. This leads to the fact that the funds that follow the index adjust positions in the direction of buying or selling the corresponding stock. These adjustments of large funds can lead to temporary increases or decreases in trading volumes.
• Liquidity and Market Depth: An increase in the effective circulation rate usually means more stocks traded on the market, which in turn increases liquidity, offering easier trading for investors. Increased liquidity makes it easier to execute large orders without affecting the price. Conversely, the decrease can narrow liquidity and lead to the stock becoming more volatile.
• Volatility: Large-scale buying or selling operations, especially by passive funds, can cause short-term volatility in the price of the relevant stock, close to the effective date of the index change. This can mean temporary price fluctuations for long-term investors, while creating opportunities for market makers and traders.
• Investor Perception and Company Valuation: Although such technical regulations are often seen by the market as a natural process, large changes in the effective circulation rate can be perceived as an indicator of significant transformations in the corporate structure of the company and indirectly affect the perception or valuation of the company's risk.

Companies Covered by the Change and Effective Date

The following are the six companies affected by the actual circulation rate updates announced by Borsa İstanbul and their respective codes:

• Çan2 Thermal Co. (#CANTE)
• Izmir Brush Industry and Trade Inc. (#IZFAS)
• Pacific Technology and Information Services Inc. (#PATEK)
• Pacific Real Estate Investment Partnership Inc. (#PSGYO)
• Temapol Polymer Industry and Trade Inc. (#TMPOL)
• Cherry Mining Inc. (#VSNMD)

The new effective circulation rates set for these shares, August 27, 2025 It will come into force in its history. This date represents a critical threshold at which the indices will begin to be calculated at the new rates and, therefore, the funds that implement passive investment strategies will revise their portfolios according to this new structure. Investors and portfolio managers are advised to carefully monitor possible movements and market reactions in relevant stocks before and after this date and review their strategies in this direction.

The Role of Borsa Istanbul and Market Transparency

Borsa Istanbul periodically reviews and updates critical parameters such as actual circulation rates in order to ensure that the indices reflect current and accurate market conditions. Such regulations, in addition to increasing market transparency, help investors make more informed decisions. Maintaining the representational power of indices is of great importance in terms of overall market reliability and depth. Because reliable indices reinforce national and international investors' confidence in the market and promote capital inflows.

For professional market participants and individual investors, such announcements provide an opportunity to review portfolio management strategies and be prepared for possible market impacts. Each change in the actual circulation rate reshapes the position of the relevant company within the market dynamics and its impact on the indices. Therefore, such statements made by Borsa Istanbul need to be rigorously evaluated and compared with market expectations. Although for long-term investors the direct impact of these technical adjustments on the fundamental valuations of companies is limited, it is useful to exercise caution in terms of short-term market mobility.