Turkish stocks extend losses as fund crisis deepens

• Finance minister offers assurances
• BIST 100 falls a further 2.8%
• Authorities liquidating 131 funds

Turkish stocks extended losses on Monday on a perceived lack of clarity over regulators’ plans to address the failure of seven asset management firms, pushing some indices to nine-month lows.

Authorities are liquidating 131 funds run by the seven. Together, the asset managers are estimated to have had more than $18 billion under management, with 455,000 investors exposed to losses.

Before markets opened, finance minister Mehmet Şimşek said the government was moving to minimise the fallout, adding that investors and the wider economy would be protected. He offered few details beyond promises of continued liquidity flows.

“We are safeguarding the legitimate rights of our fund investors,” Şimşek said on social media.

“We will continue to take necessary measures – particularly regarding the liquidity required by the market – to ensure that these developments do not negatively impact the financial system or the real economy.”

But his statement, and the lifting of an asset freeze affecting some listed companies as part of prosecutors’ investigations, did little to reverse the market downtrend.

Further reading:

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• Turkish inflation slows to three-month low
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Having shed 5 percent in the previous week, the blue-chip BIST 100 index was last down more than 2.8 percent, dropping to 12,529 points, a level last seen in mid-January.

The wider all-share index eased almost 3.5 percent in early trading to 15,162 points, its weakest since the second week of the year.

In the first two hours after the opening bell, trading in more than 100 listings was suspended after the activation of automatic circuit breakers, which halt dealing in any stock if it sheds 10 percent in one session.

With uncertainty persisting, there is little appetite to buy shares apart from a few leading blue chips and perhaps banks, market analyst İris Cibre Lostar said.

“There is anxiety due to not knowing who could be linked with this,” she told AGBI. “Hence purchasing confidence is crushed.”