72,000 accounts receive 68 billion lira in fund crisis; liquidation continues in 38 funds

According to an official statement from the Capital Markets Board (CMB) in the fund crisis that shook Turkey's capital markets, as of October 30, the number of funds in liquidation has fallen to 38, while approximately 72,000 accounts have received a total of 68 billion lira in payments to date.

Economim (Dünya) newspaper outlined the course of the crisis in a 10-question analysis. According to this, the crisis originated from the excessive concentration of certain funds in low-volume, shallow-liquidity shares traded on Borsa Istanbul. As fund values recorded hundredfold increases based on inflated shares, new investors were drawn into the system and the structure continued through a Ponzi-like cycle.

When international index providers set a timeline for transparency and actual circulation, the first trigger was pulled. Following the CMB, alignment rules it introduced led to a collapse in inflated funds and shares; on September 17, a total of 131 funds belonging to 7 portfolio management companies were placed into liquidation. These 131 funds contained a total of 455,758 individual investors, and the total asset size was approximately 800 billion to 1 trillion lira (17-20 billion dollars).

Following the crisis, the contagion spread to the equity and corporate bond markets, causing tens of billions of dollars in asset losses. With Law No. 7596 passed by the Grand National Assembly and the related CMB procedural decision, extraordinary liquidation processes were clarified; the first interim payments for funds under this scope began as of yesterday.

The number of fund investors had risen by 51.54 percent before the crisis to 6 million, while the portfolio size had approached 11 trillion lira with a 864.9 percent increase. As of the end of September, the number of investors fell to 5.8 million and the portfolio size declined to 9.5 trillion lira.