Turkey investment fund crisis triggers liquidations and political resignation

Turkey is facing a major capital markets upheaval as an investigation into an $18 billion investment fund crisis continues. The Capital Markets Board (SPK) has ordered the liquidation of 131 funds affecting more than 455,000 investors after managers struggled to meet redemption requests.

Following a review, the Istanbul General Prosecutor's Office lifted asset restrictions on 45 companies and 19 funds, though measures against specific individuals remain in place. The crisis, which centered on managers such as Pusula Portföy and Tera Portföy, was exacerbated by large positions in illiquid stocks. This liquidity pressure contributed to a sharp sell-off on Borsa Istanbul, with the BIST 100 index dropping over 8% in a single week.

The political fallout includes the resignation of Fatma Betül Sayan Kaya, Vice President of the ruling AK Party. Kaya resigned following allegations that she sold shares worth tens of millions of dollars shortly before the market crash. Finance Minister Mehmet Şimşek stated that protecting investment and production remains a priority, while emphasizing that judicial proceedings against those involved in market distortion will proceed.