ISTANBUL
Turkish equities have entered bear market territory. The BIST 100 index closed at 12,084 points after a 1.7 percent drop, marking a 20 percent decline since early May and a 25 percent collapse when measured in dollars. The sell-off has erased billions in market capitalization from Istanbul-listed firms.
The root cause is mechanical: investment funds held outsized positions in low-liquidity stocks and faced redemption demands they could not meet. When investors requested their capital back, funds were forced into fire sales, triggering cascading losses across the exchange.
Terra Asset Management and Pusula Asset Management were specifically unable to fulfill redemptions. The failure triggered 131 funds to enter liquidation processes, effectively paralyzing a major segment of the market. Nearly half a million investors are caught in the freeze.
The scale of individual losses is stark. Mehmed Kervanci, 28, invested 2.5 million liras (roughly $51,000) into a high-yielding stock fund intended for his wedding. His capital is now trapped in liquidation.
Government response has been aggressive. Vice President Cevdet Yılmaz now leads a newly established committee tasked with expediting fund liquidations and stabilizing capital markets. Several financial sector executives have been detained or arrested as part of the regulatory investigation. President Erdoğan has pledged swift administrative and legal reforms to address what he characterized as systemic market distortions.
Central bank and regulatory interventions are underway, though their effectiveness in halting the broader decline remains uncertain. The liquidity crisis also arrives as Türkiye faces heightened scrutiny from a pending global index review, adding external pressure to restore capital market confidence.
