Fund crisis in Borsa Istanbul in the international press: 'Fund rush' caused Turkish stocks to decline

The sharp decline in Borsa Istanbul due to the liquidity problems in the fund market also found wide coverage in the international press. Financial Times (FT), IntelliNews and Reuters covered the activity in the markets following the developments in Pusula Portföy under different headings.

FINANCIAL TIMES: 'FUND RUSH' DECREASED TURKISH SHARES

In its news titled "Turkish stocks declined in the 'fund rush' in which investors attracted 1 billion dollars", the UK-based Financial Times (FT) wrote that the BIST 100 index lost more than 5 percent of its value on Wednesday, and that this followed the decline of more than 2 percent on Tuesday.

The newspaper stated that the sales wave started after Pusula Portföy announced that it could not meet the refund demands of investors in some money market and investment funds, but according to analysts, the problem is broader than that.

According to FT, in the last two years, some local funds have purchased shares of companies with which they are affiliated and whose free float rates are low, through affiliated companies. The news stated that intense purchases increased the prices of the shares in question and the net asset values ​​of the funds investing in them, and that high returns attracted more investors and ensured new money inflows into the same or related shares.

East Capital portfolio advisor Emre Akçakmak described what happened in his assessment to the FT: "What we are seeing now is effectively a 'fund run', with investors exiting funds due to liquidity concerns."

The newspaper also pointed out that the shock in the markets coincided with a period when Turkey was trying to re-establish its international economic credibility with the economic program under the management of Treasury and Finance Minister Mehmet Şimşek.

RBC BlueBay Asset Management Senior Country Strategist Timothy Ash told the FT, "This is perhaps Şimşek's biggest test yet."

INTELLİNEWS: LIQUIDITY CRISIS IN COMPASS SHOCKED TURKISH MARKETS

IntelliNews, a Berlin-based news service focusing on economy, finance and business world, asks: "Liquidity crisis, sale of boats and fires to Greece: How did the fall of Pusula Holding shake the Turkish markets?" In his analysis titled, he discussed in detail the impact of the developments in Pusula Holding and Pusula Portföy on the markets.

The news, which referred to the allegations that he fled to Greece from Marmaris on a private boat while an arrest warrant was issued for Pusula Portföy President Muhammed Yariz, included the chronology of the default crisis experienced in Pusula Portföy in recent days.

IntelliNews reported that an agreement had previously been reached to sell Pusula Holding and its subsidiaries to Tera Group, but the transfer of Tera has not yet been completed legally and operationally and is subject to the approvals of the Competition Authority, CMB and the Banking Regulation and Supervision Agency (BDDK).

The news also stated that Tera specifically stated that he was not legally responsible for the current fund liabilities of Pusula Portföy.

While IntelliNews evaluated that the systemic threat to Borsa Istanbul and bond markets remained limited for now, it argued that the developments pointed to vulnerabilities in the rapidly growing non-bank finance, savings finance and portfolio management sectors in Turkey.

REUTERS: TRADING BAN FROM REGULATOR

Reuters, in its news titled "Regulatory institution in Turkey filed criminal complaints and imposed transaction bans due to stock manipulation", stated that the CMB filed criminal complaints against 38 people in connection with the transactions in Katılımevim, Gündoğdu Gıda and Destek Finans Faktoring shares and imposed a two-year trading ban on these people in Borsa Istanbul.

Reuters reported that a two-year transaction ban was imposed on Pusula Portföy, which is in the same group with Katılımevim, and company executives were among those referred to the prosecutor's office.

The news stated that Pusula Portföy announced that it could not fulfill its obligations in some funds this week due to investor outflows following regulatory changes.

Reuters pointed out that despite the recent sharp losses, the shares of the three companies subject to CMB's investigation have still increased significantly since the beginning of the year.

Although Katılımevim shares have decreased by approximately 59 percent in the last two weeks, they have increased by over 300 percent since the beginning of the year; Although Gündoğdu Gıda fell by more than 75 percent from its peak at the end of July, it is over 140 percent; He reported that Destek Finans Faktoring has gained more than 300 percent in value since the beginning of the year, although it decreased by 37 percent from its peak at the beginning of July.

COMMON POINT IN THE INTERNATIONAL PRESS: LIQUIDITY PROBLEM

In the news and analyzes of the international press, the connection between the investors' demands for exit from the funds at Pusula Portföy and the problems in meeting these demands with the sharp sales in Borsa Istanbul were highlighted. The news also included evaluations that if outflows from funds increase, some funds may sell their assets to convert them into cash, which may further exacerbate price movements in the markets.