ISTANBUL — Turkish authorities moved to stabilize financial markets after a sharp stock-market selloff exposed liquidity problems at several investment funds, prompting the central bank to increase funding and regulators to take emergency measures.
The intervention came after Turkey’s benchmark BIST 100 index fell more than 5% on Wednesday, following heavy selling that was linked to difficulties faced by some funds trying to meet investor withdrawal requests.
Officials have stressed that the problems are concentrated in a limited part of the fund market and do not represent a broader structural threat to Turkey’s financial system.
Central Bank Boosts Liquidity Support
The Central Bank of the Republic of Türkiye increased one-week repo funding to 300 billion Turkish lira, up sharply from the previous day’s 1 billion lira operation, according to Reuters and Turkish media reports.
The central bank also increased banks’ borrowing limits in the interbank money market tenfold, providing additional access to Turkish-lira liquidity as authorities sought to prevent market stress from spreading.
The measures were announced as investors and fund managers faced increasing pressure to raise cash following the market decline.
Seven Fund Managers Hit by Regulatory Action
Turkey’s Capital Markets Board, known as the SPK, ordered the suspension of trading on its TEFAS electronic fund platform for funds managed by seven portfolio-management companies.
The companies include Tera Portföy, Pusula Portföy, Hedef Portföy, Atlas Portföy, A1 Portföy, Pardus Portföy and Bulls Portföy.
The regulator also ordered the liquidation of specified funds managed by the companies under procedures it will determine.
Reuters reported that the funds designated for liquidation had a combined portfolio size of approximately 891 billion lira, equivalent to about US$21.4 billion, with roughly 353,000 investors.
Margin Rules Temporarily Eased
Authorities also moved to reduce pressure on leveraged investors.
The Capital Markets Board cut the minimum equity-maintenance requirement for margin trading from 35% to 20%, allowing brokerages to apply the lower threshold according to their own risk policies.
The temporary measure is scheduled to remain in effect through Oct. 2, unless the regulator announces otherwise.
The measure is intended to give investors and brokerages additional room during the period of market stress.
What Triggered the Selloff?
The immediate problem centered on investment funds struggling to meet redemption requests.
Reuters reported that changes to fund regulations in August, combined with steep declines in some thinly traded stocks, made it harder for funds holding those securities to raise cash.
When investors request withdrawals, funds may need to sell assets. If those assets are difficult to sell without sharply lowering their prices, the resulting pressure can deepen market declines.
The Financial Times separately reported that investors withdrew as much as US$1 billion from Turkish investment funds on Wednesday, according to fund-flow data cited by the newspaper.
Authorities Say the Problem Is Contained
Turkey’s Financial Stability Committee, chaired by Treasury and Finance Minister Mehmet Şimşek, met Thursday to assess the turmoil.
The committee said the recent volatility stemmed from credit and liquidity problems involving funds managed by a limited number of portfolio-management companies.
It characterized the difficulties as temporary and manageable and said there was no fundamental or structural threat to the functioning of Borsa Istanbul or Turkey’s capital markets.
The committee said regulators would continue taking action against market-disruptive activities and would work to prevent the liquidity problems from spreading to other parts of the financial system.
Market Manipulation Allegations Add Another Layer
The market turmoil also coincides with separate regulatory action involving alleged stock manipulation.
Turkey’s Capital Markets Board filed criminal complaints against 38 people and imposed two-year trading bans related to alleged manipulation involving shares of three listed companies.
The regulator also imposed a two-year ban on Pusula Portföy, whose executives were among those referred to prosecutors. These are regulatory allegations and do not by themselves establish criminal guilt.
The developments have intensified scrutiny of trading practices and the structure of parts of Turkey’s investment-fund industry.
Why Investors Are Watching Closely
The episode is particularly significant because Turkey has been seeking to strengthen its capital markets as part of a broader economic stabilization effort.
The country’s financial markets have also been operating against a backdrop of high inflation and elevated interest rates, making liquidity conditions particularly important for investors and companies.
The latest selloff therefore presents authorities with a delicate task: restoring orderly trading and investor confidence while tightening market rules without creating additional forced selling.
For now, Turkish officials are emphasizing that the disruption remains contained.
But investors will be watching whether the measures stabilize fund withdrawals and stock prices — or whether liquidity pressures spread beyond the group of funds already affected.
