Pusula Portfoy, a Turkish asset manager, recently defaulted on some investor redemption requests, leading to increased concerns about liquidity stress within Turkey's broader fund industry. This development triggered a sharp downturn in the Borsa Istanbul 100 Index, which fell by as much as 5.7% intraday and extended its two-day decline to 6.9%. This marked the largest two-day drop since March 2025, with nearly all benchmark stocks experiencing losses. The index later trimmed some of its losses, trading 3% lower as of midday.
The market rout follows Pusula Portfoy's announcement that some of its investment funds were unable to make timely payments to investors seeking to withdraw their money. Data from Fintables indicated that investors had withdrawn approximately ₺129 billion (equivalent to $2.7 billion) from Pusula funds since late August. This situation was exacerbated by the Capital Markets Board's (CMB) move to restrict funds with highly concentrated positions in illiquid stocks, putting additional pressure on Pusula to fulfill withdrawal demands. The company's chairman, Muhammet Yariz, was reportedly arrested as part of an ongoing investigation.
The default has sent ripples through the Turkish financial sector, leading to a circuit breaker being activated on the BIST 100 index after its decline reached 5%. Over 350 other shares also triggered circuit breakers during the session. All sectoral indices, including banking and industrial stocks, experienced significant drops before paring some losses. The broader market reaction also saw an investigation opened into a former head of Borsa İstanbul, İbrahim Mustafa Turhan, for a social media warning about systemic financial risk. Another fund manager, Atlas Portföy, adjusted its fund rules to monthly valuations and extended payment periods to manage withdrawals, highlighting the systemic concerns raised by Pusula's difficulties.
The timing of Pusula Portfoy's redemption failure is particularly notable as it coincided with Tera Group's pending acquisition of the broader Pusula group. While Tera Group has stated that the redemption issue should not be interpreted as a reflection of its own financial health and that the acquisition awaits regulatory approval, the situation has raised questions among investors about the health of the funds and the future of the takeover. Investors are now closely monitoring updates from both companies and regulators, as the outcome could significantly impact the Turkish investment fund landscape.
