Turkey's Finance Minister Mehmet Şimşek is set to lead meetings over two days, starting today, to discuss the liquidation and payment procedures for 131 investment funds. The meetings, which will involve relevant institutions and organizations, aim to address the financial crisis that emerged after defaults and frozen assets. These funds, managed by seven portfolio management companies, have impacted around 450,000 to 500,000 investors and hold approximately $18 billion in assets. The primary goal of these discussions is to ensure fair, efficient, and swift execution of the liquidation and payment processes, while prioritizing the protection of investor rights and interests. Discussions will also cover steps to support the healthy functioning of markets and financial stability within the mandates of the involved institutions.
One potential measure being considered by Turkish authorities is the creation of a pooled fund from the assets of the liquidated funds to facilitate investor repayments. This move comes after a week of market turmoil, which saw redemption failures, a sharp sell-off in stocks, and the freezing of assets belonging to executives at several investment firms, including Tera Yatırım Menkul Değerler AS and Pusula Finans Holding AS. The Capital Markets Board had ordered the liquidation of these 131 funds, and policymakers are still debating which entity would manage such a pooled asset fund.
The crisis began with announcements from fund management companies like Tera and Pusula that they were unable to repay investors, leading to a significant sell-off in Turkish stocks. The Borsa Istanbul 100 index experienced an over 8% loss last week. In response, authorities not only initiated fund liquidations but also detained executives from various financial companies, including Muhammad Yaryz of Pusula Portföy and Ibrahim Bekçi of Tera Portföy, as part of an investigation into alleged market manipulation. The proposed pooling of assets aims to help investors recover some of their losses, though some analysts suggest that only a portion of the estimated $18 billion to $20 billion invested might be recovered through market sales due to potential overvaluation of securities.
