Turkish stocks experienced a significant downturn on Wednesday, with the Borsa Istanbul 100 Index falling as much as 5.7%. This plunge was triggered by an asset manager's failure to fulfill redemption requests, intensifying fears about liquidity stress within Turkey's fund industry. The index's two-day decline reached 6.9%, marking its largest drop over such a period since March 2025. By late morning in Istanbul, the index had pared some losses and was trading 3% lower.
All but one stock in the benchmark index recorded declines, with Destek Finans Faktoring AS experiencing a 10% fall. The crisis was exacerbated by Pusula Portfoy's announcement that its investment and money market funds could not honor redemption requests. This situation led to net redemptions totaling 550 billion Turkish lira, equivalent to approximately $1.13 billion, from Turkish investment funds on that day, according to financial data platform Fintables.
This incident highlights underlying fragilities in the Turkish market, where high inflation (around 31%) has driven local investors into equities as an inflation hedge. While the BIST 100 has seen significant gains, and foreign investors added about $2.3 billion in net stock purchases in 2025, individual stocks have also experienced sharp, speculative moves. Circuit breakers, which pause trading when prices move too rapidly, have been activated for several stocks recently, not necessarily signaling fundamental value changes but rather market mechanics struggling with liquidity imbalances. The current redemption crisis points to a broader challenge for investor confidence and market stability.
