Turkish Stock Market Hit by Liquidity Crisis; 131 Funds Liquidated

Borsa Istanbul's BIST 100 index dropped 5.54% to 13,122.5 points on September 16, its worst session in months, as heavy redemption requests from investment funds sparked a liquidity crunch. The index had lost nearly 10% over the preceding week. A circuit breaker halted trading at 16:04 local time; sessions resumed 20 minutes later. Over 60 stocks hit their daily lower limits, and 586 shares closed lower across the market.

The sell-off intensified after Pusula Portföy disclosed defaults on redemption payments for two funds on September 15. Tera Portföy followed on September 16, citing a "temporary liquidity squeeze" in certain funds and altering redemption terms for six funds, including its largest, TLY, which has over 102,000 investors and 243.6 billion lira in assets. Redemption payments for these funds were extended to the 10th business day after valuation.

“The turbulence stems from credit and liquidity issues in a limited number of funds, not systemic risk.”

The Capital Markets Board (SPK) responded on September 17 by ordering the liquidation of 131 funds managed by seven portfolio management companies: Tera, Pusula, Hedef, Atlas, A1, Pardus, and Bulls. The funds, representing roughly $18 billion in assets and over 350,000 investors, were suspended from trading on the TEFAS platform. Ziraat Bankası and Türkiye İş Bankası were appointed to oversee the orderly liquidation, expected to take up to three months.

Prosecutors detained executives including Pusula Portföy Chairman Muhammet Yarız, Destek Holding Chairman Altuntas Kumova, Tera Portföy Deputy Board Member Ibrahim Bekçi, and Hedef Holding Chairman Namık Kemal Gökalp. Travel bans were imposed on Tera Holding Chairman Emre Tezmen, Pusula Holding's Serdar Turhan, Bulls Yatırım Chairman Kemal Akkaya, and Lydia Holding Chairman Enver Çevik. Authorities cited "market manipulation" allegations.

Treasury and Finance Minister Mehmet Şimşek, chairing the Financial Stability Committee, stated the turbulence stemmed from credit and liquidity issues in a limited number of funds, not systemic risk. He noted the affected funds represent 10-11% of total fund assets, while 90% of the market operates healthily. Şimşek warned of strict action against market manipulation and pledged measures to ease liquidity constraints and prevent contagion.

Global factors contributed to the week's volatility, including rising Middle East tensions after Houthi forces seized a strategic Red Sea island, pushing up oil prices — a negative for energy importer Turkey. Rising U.S. long-term yields, with the 10-year Treasury near 5% and the 30-year approaching 6%, increased financing costs independently of Federal Reserve policy. A global tech sell-off, dragging the Nasdaq 100 down over 3% to near 28,900, also weighed on sentiment.

The BIST 100 rebounded on September 17, gaining 387 points to close higher as bank shares led a recovery following the regulatory interventions and the Financial Stability Committee's reassurances. Analysts cite technical resistance at 13,700-13,800 and support at 13,300-13,400.