Turkey’s BIST-100 fell more than 8% in the week to September 18 after funds concentrated in thinly traded, low-free-float shares could not meet redemptions. They sold their liquid holdings instead, spreading losses into the index and provoking more withdrawals. Pusula Portföy and then Tera Portföy disclosed redemption problems. Regulators ordered 131 funds across seven managers into liquidation; the affected vehicles held more than $18 billion. Turkey’s Capital Markets Board clarified on September 23 that the funds had 455,758 unique investors, replacing an earlier figure of roughly 353,000. The central bank expanded repo funding from a few billion lira to 603 billion lira ($12.35 billion) and increased banks’ interbank borrowing limits tenfold.
The subtle part is that the index itself became part of the feedback loop. Borsa Istanbul will replace more than a quarter of the BIST-100 next month and has tightened the volatility and equity-size criteria for its top market segment. In a market with too few genuinely liquid large caps, benchmark membership can lend a false patina of exit capacity to crowded small floats. Forced sales then hit the securities that can still trade, rather than the securities that caused the problem. Turkish officials say the episode is contained; MSCI and FTSE Russell have separately questioned transparency and accessibility. That classification risk matters because a downgrade could remove patient foreign benchmark capital just as the exchange is trying to improve its benchmarks. Reuters’ market-structure account · Reuters on the index reshuffle · Capital Markets Board investor-count clarification