Turkey’s Stock Market Crisis: Hundreds of Billions at Risk
The sharp fall in Turkey’s stock market is no longer just a story about share prices. It has exposed serious problems in several investment funds, leaving hundreds of thousands of investors facing uncertainty over their money.
On 16 September, the BIST 100 index fell by 5.54%, following a rush by investors to withdraw money from investment funds. The immediate problem was that some funds could not meet redemption requests. Pusula Portföy and Tera Portföy were among the companies at the centre of the crisis.
The scale of the problem is enormous. The Capital Markets Board (SPK) ordered the liquidation of 130 funds managed by seven portfolio companies, including Tera, Pusula, Hedef, Atlas, A1, Pardus and Bulls Portföy. Reports put the total value of the funds affected by the liquidation at approximately 830–891 billion Turkish lira, involving hundreds of thousands of investors.
The crisis has also led to a serious investigation. Pusula Portföy chairman Muhammet Yarız was arrested, while executives connected to Tera and other companies faced detention or judicial restrictions. The SPK filed criminal complaints against 38 people over suspected market manipulation.
What happens to investors’ money?
This is the most worrying question. Investors cannot simply assume that the amounts shown in their fund accounts will be returned in full. The funds must be liquidated, and the money recovered will depend on the actual value of the assets sold.
Many investors may face substantial losses. Even if some money is eventually returned, inflation and the possible collapse in the value of assets held by the funds could mean that what they receive is worth far less in real terms.
The stock market’s recovery on 17 September does not resolve this problem. The real story is the fate of hundreds of billions of lira and the investors whose savings are tied up in these funds.
