FX.co ★ BIST 100 Plunges on Fund Liquidations

The Turkish BIST 100 index has slumped more than 8% to around 13,300, retreating from the three-month high near 14,500 reached in early September. This drop has occurred despite the support of a weaker lira, as a wave of redemptions in investment funds spilled over into the share prices of major Turkish companies. Istanbul-based fund manager Pusula Portföy disclosed that some of its funds were unable to meet investor redemption requests, prompting investors nationwide to unwind positions in similar asset classes. The resulting run on funds has intensified scrutiny of vehicles previously accused of artificially boosting net asset values by coordinating purchases of securities with limited free float. In response, regulators have begun liquidation proceedings against several prominent firms in the Turkish financial system, including Hedef, Tera, Atlas, A1, and Pardus Portföy. Meanwhile, the Turkish central bank left its benchmark interest rate unchanged this month but loosened collateral rules in short-term funding markets in an effort to bolster liquidity and contain financial stress.