Turkish equities suffered one of their steepest monthly declines in years in September, as a crisis at several investment fund managers triggered heavy selling and drove domestic retail investors out of the market.
The benchmark BIST 100 index fell 12.4% over the month, while total market capitalization dropped 23.3% from 22.9 trillion liras ($466.3 billion) to 17.6 trillion liras, erasing about 5.3 trillion liras ($108.5 billion), according to figures compiled by Türkiye Today.
Retail investors exit
Data from the Central Securities Depository (MKK) showed the number of investors holding shares fell by 105,019 in September to 6.7 million. Including the first days of October, the decline from the end of August widened to roughly 180,000, leaving 6.6 million investors.
Foreign investors moved in the opposite direction. Their number rose slightly to 33,401, and the foreign share of equities held in custody climbed 4.3 percentage points to 36.9%, as the value of domestic holdings fell faster. Central bank data showed foreigners sold a net $109.8 million of Turkish stocks in the week to September 18, then bought $358.6 million the following week.
What triggered the sell-off
The trouble began after the Capital Markets Board announced sweeping changes to free-float rules on August 28. Funds with concentrated holdings in thinly traded shares came under pressure, and redemption demands pushed some into default on September 16 and 17. Authorities then ordered the liquidation of 131 funds run by seven portfolio companies, affecting 455,758 investors.
The sell-off spread into wider risk measures. On September 28, the BIST 100 slid more than 3% intraday with every sector index in negative territory, and Türkiye's five-year credit default swap spread climbed above 250 basis points, the highest since May. The central bank sold more than $6 billion from net reserves in the week ending September 18, according to official figures.
Markets showed tentative signs of stabilizing in early October, with market capitalization recovering about 1.9% to 17.9 trillion liras by October 3. Authorities had also lifted asset freezes on 45 companies, including listed firms, to limit disruption to business.
Sources
- Over 100,000 investors exited Borsa Istanbul, $100B wiped out amid fund rout
- Istanbul stocks slump as Türkiye CDS hits four-month high amid fund turmoil
Photo: Thomas Steiner / CC BY-SA 2.5, via Wikimedia Commons
