Analysis
Smart, independent reporting on Turkey's politics, economy and foreign affairs.
More than a month after the fund collapse occurred, the shockwaves continue to rock the stock market. The crisis wiped out trillions of liras in corporate market capitalization and drove key valuation metrics to multi-year lows in Borsa Istanbul.
The ruling party has rapidly rolled out compensation for some victims of the stock market scandal that is rocking the government, and cut ties with one former minister, while the main opposition Yeni Party links two sitting ministers to the affair.
The government is seeking to create the impression that it is cutting ties with those involved in the stock market scandal and has launched an investigation, announcing that up to a million liras of losses will be repaid to investors soon. But the opposition calls it the 'corruption of the century' and is seeking a parliamentary inquiry.
Foreign investors' confidence in Turkish equities is under mounting pressure as two of the world's leading index providers signaled Istanbul's stock market could face a downgrade. Morgan Stanley Capital International (MSCI) issued another warning regarding investment accessibility and shareholder transparency, announcing it may re-evaluate free-float structures on a company-by-company basis and reclassify certain shareholders as 'non-free float' to address distorted calculations driven by coordinated fund actions.
Turkey's Capital Markets Board (SPK) is tightening its grip on investment funds and the stock market under new chair Mahmut Sütcü in response to domestic and international calls for a clampdown on manipulation.
Turkish authorities have launched a probe into Investco Holding for allegedly laundering illicit gains obtained in violation of the Capital Markets Law through the stock exchange.
Following the cancellation on Sept. 2 of the CHP Istanbul Provincial Congress, losses on the Istanbul Stock Exchange exceeded 5% within the day. The banking index dropped by more than 8% before rebounding.