BIST 100 Plunges on Fund Liquidations

The Turkish BIST 100 equity index sank over 8% to 13,300 since testing three-month highs at 14,500 in early September, despite a lower lira, as a run on investment funds spread into equity prices of major Turkish companies. Leading Istanbul fund manager Pusula Portfoy announced that some of its funds could not meet redemption requests, leading investors across the country to liquidate positions in similar asset classes. The run triggered a crisis on funds that had been accused artificially inflating the NAVs through co-ordinated buying of assets with limited outstanding shares, driving authorities to start the liquidation process of major firms in the Turkish financial system, including Hedef, Tera, Atlas, A1, and Pardus Portfoy. The Turkish central bank had held interest rates unchanged this month but eased collateral conditions on short-term funding markets to prop-up liquidity in financial stress.