Turkish authorities have taken swift action to address a liquidity crunch in investment funds that sparked a selloff in the country's stock market. The central bank injected 300 billion lira in repo funding and increased banks' interbank borrowing limits tenfold to ensure lira liquidity. The Capital Markets Regulator suspended several investment funds, worth a combined $21.4 billion, and ordered the liquidation of 130 funds, including those managed by Tera and Pusula.
Among the measures taken, Turkish authorities arrested several senior financial-sector executives and banned others from leaving the country as part of an investigation into large-scale capital outflows. Detainees include Altunc Kumova, chairman of Destek Holding, Ibrahim Bekci, deputy chief executive of Tera Portföy Yönetimi AS, and Namim Kemal Gökalp, chairman of Hedef Holding AS. The total value of investments in the liquidated funds reached approximately $18 billion, affecting over 350,000 investors.
The immediate trigger for the crisis was an announcement by Pusula Portföy that it could not meet investor redemption requests, leading to $1 billion leaving Turkish investment funds in a single day. Following this, Tera Portföy reported similar issues, and Atlas Portföy extended redemption deadlines. The BIST 100 index, which had fallen 5.54% on Wednesday, recovered 2.95% on Thursday after the interventions, closing at 13,509.76 points. Analysts view these measures as an attempt to contain the crisis, though caution remains regarding the recovery's duration and extent.
In total, trading was frozen in funds run by seven asset managers: Tera, Pusula, Hedef, Atlas, A1, Pardus, and Bulls. The ordered liquidations included 42 funds managed by Pardus, 31 by Hedef, and 16 by Atlas. The broader market shakeout occurs as Turkey endeavors to rebuild its international economic credibility under a stabilization program led by Finance Minister Mehmet Şimşek, with some troubled groups managing assets worth approximately $29 billion.
