How does this work?: Why is Migros the stock market star in Turkey?

class = “sc-cffd1e67-0 iQNQmc”>

Migros Ticaret is a real stock market star in Turkey. Shares of the country’s largest supermarket chain have increased by around 1,000 percent since May 2022. This places it in seventh place in Turkey’s leading index “ISE 100” with 100 members. Migros Ticaret increased by over 40 percent again in 2024. 17 of 19 bank analysts listed by Bloomberg recommend buying supermarket shares.

However, the Migros Cooperative Union in Switzerland has nothing to do with Migros in Turkey. Or not anymore. Turkish Migros was a subsidiary of Swiss Migros until 1974. Later, the supermarket chain, which still operates under the name Migros Türk, became independent and began to grow. The last major deal was successful in 2017: At that time, the business of British supermarket giant Tesco in Turkey was taken over.

Almost identical to old parent company

Today, Migros Ticaret has approximately 52,000 employees and operates 3,368 stores, ranging from small Migros jet stores in cities to shopping malls and luxury malls. Migros Ticaret also operates outside the market, operating the takeaway “package taxi”, fintech “Money Pay” and “Migen” chain with 55 electric charging stations in Turkey. The logo remains the same: except for the lowercase “i”, it is almost identical to the logo of the former parent company in Switzerland.

Of course: Migros Ticaret’s growth attracted the attention of many investors. The largest individual shareholders include US fund giant Vanguard, Allianz and HSBC. Migros’s profit in the first nine months of 2023 increased significantly due to the price increases and was above market expectations. More than 500 new stores are expected to be added in 2024.

Türkiye is a country with high inflation

However, this is only part of the success story of the Migros share. Probably the most important: Turkey is a high-inflation country like Argentina. Last February, the inflation rate rose to at least 67 percent. This situation causes domestic companies’ prices to rise significantly and their sales to increase.

The result was and is a massive devaluation of the local currency, the lira, in Turkey. Savers in high-inflation countries often seek refuge in gold, valuable currencies, Bitcoin or the stock market to protect themselves from loss of purchasing power. This also explains why the leading index ISE 100 has increased by 270 percent since mid-2022.

Migros Ticaret stock price performance since mid-2022 is no longer 1000 percent in the local currency, but “only” 430 percent if you convert it to Swiss francs, for example. However, despite this price performance, if Turkish Migros were listed on the stock exchange, it could leave its Swiss name behind.

Source :Blick