Turkish Stocks Sink

Turkish benchmark BIST 100 index traded below the 11,500 level in late October 2026, hovering near its year-to-date lows, while average daily trading volume fell by around 30% year-on-year over the past month amid turmoil in the investment fund industry. Last month, regulators ordered the liquidation of 131 funds managed by seven asset managers after warnings that some might be unable to meet redemption requests. The funds had amassed more than $20 billion in assets in just three years, attracting nearly half a million investors seeking outsized returns to offset the lira’s depreciation and persistently high inflation. In September, the benchmark stock index plunged around 16%, marking its steepest monthly decline since 2008.

The Turkish BIST 100 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.

The BIST 100 stock index were above 14,270 in April, trading near record highs and extending the strong momentum since the start of the year despite the mixed macroeconomic backdrop for equities. Shares of Aselsan, which are by far the heaviest part of the index, topped TRY400 for the first time on record this month to double in value in the only the last four months. The company tracked the rest of the defense sector in NATO amid the constant threat of escalation to the conflicts in the Middle East and Ukraine. Meanwhile, banks were also higher, outperforming other sectors as Turkish investors commonly turn to banks as a shield to high inflation and currency depreciation in the economy. The TCMB held rates unchanged to consolidate the hawkish pivot following the surge in energy prices this year, but the halt in reverse-repo auctions continued to lift overnight rates in the financial system, preventing a further boost for equities.