Lydonisms in Turkey's financial system causes a speculative bubble scandal starring seven asset management companies.
The Turkish authorities suspended transactions in mutual funds managed by these companies and ordered the liquidation of 130 funds, in attempting to limit the consequences of a speculative «bubble» which rocked the stock exchange in Istanbul and threatens the savings of thousands of investors.
The neighbor's central bank also facilitated liquidity access to Turkish pounds to prevent panic sales.
At the same time, the country's state bank started talks on the acquisition of two of these companies associated with the turmoil, while the capital market regulator He referred 38 people to the prosecutors for possible market manipulation.
In a difficult time
The turmoil comes at a difficult time for Turkey, which is trying to restore its economic credibility, internationally, through a stabilisation programme.
The main stock index (Turkey's BIST 100) declined by 8% on Tuesday and Wednesday, although it recovered up to 2.5% in Thursday morning transactions after the measures announced.
Large purchases in a company network
At the heart of the turmoil are investment funds which, over the last two years, have gone into large placements in related companies, but which have been available to them. only a small part of their shares available for trading on the stock market.
These coordinated markets raised the stock prices of these companies, increasing their value. At the same time, they attracted more investors to fuds, ensuring hot money for the purchase of even more shares of related companies.
Unable to pay
This week's sell off was triggered when Istanbul's top fund management company Pusula Portföy announced that some of the funds it manages were not able to pay in time to investors who asked to liquidate their shares, the required amounts.
Noiseed microinvestors They rushed to withdraw their savings, in a development that analysts characterized «Fund run»
A second fund management group, Tera Portföy, announced that two of its funds also failed to pay the redemption amounts in time, while a third, Atlas Portföy, gave a margin of payment indicating essentially a failure to repay
The assets managed by the three groups totaled around 29 billion dollars.
Turkey's financial authorities are now attempting to remove the transmission of the crisis to ordinary households, through a rescue intervention supported by the Turkish Ministry of Finance.
In addition, state bank Emilak Katilim announced that it started talks on the acquisition of two Pusula Group companies. These are companies that collect customer savings to finance housing and car purchases without contractual interest loans.
With... bubbles on top
At the peak of the boom, the listed investment company Hedef Holding became for a short time the stock market's second largest company based on capitalisation, behind the Aselsan defence electronic systems group.
The cycle began to collapse when MSCI warned in June about possible «coordinated trading behaviour» between capital and closely related listed companies. In addition, S&P Dow Jones has put Turkey under review, considering its potential for downgrading from emerging to regional market
Emre Tezmen, president of Tera Holding, one of the companies at the heart of the crisis, attributed the turmoil to «pre-planned, deliberate and organised speculative attack» from «notorious malicious forces».
In a statement he stressed the «domestic and national» Tera's features and expressed his support for President Recep Tayyip Erdogan.
Tezmen now faces an exit ban from the country as part of the investigation initiated by the prosecutors of Istanbul.
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