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Türkiye's stock exchange, Borsa Istanbul, suffered one of its deepest drawdowns in recent years in September as over 100,000 investors exited the market amid fallout from fund redemptions that triggered a wider sell-off.
The number of investors with positive share balances fell by 105,019 to 6.7 million in September, according to Central Securities Depository (MKK) data.
Meanwhile, Borsa Istanbul’s market capitalization plunged 23.3% in September, from ₺22.9 trillion ($466.3 billion) at the end of August to ₺17.6 trillion at the end of the month, wiping out ₺5.3 trillion ($108.5 billion) in market value, while the benchmark BIST 100 index retreated 12.4%.
Foreign investors bucked the trend, rising by 128 to 33,401 in September from 33,273 in August and by 3,087 from January.
Their share of publicly traded Borsa companies also increased, with the foreign custody ratio climbing 4.3 percentage points to 36.9% from 32.6% in August, while the domestic ratio fell from 67.4% to 63.1%.
The foreign ratio nevertheless remained 0.3 percentage points below its January level of 37.2%.
Despite selling a net $109.8 million in equities during the week ending Sept. 18, when several investment funds defaulted after failing to meet rising investor redemption demands, foreign investors bought $358.6 million in shares the following week, central bank data shows.
After Türkiye’s Capital Markets Board (CMB) announced sweeping changes to free-float rules on Aug. 28, some funds known for their excessive gains in recent years and concentrated holdings in certain stocks came under selling pressure at the start of September.
The selling intensified as investors rushed to redeem their holdings, eventually pushing some funds into default on Sept. 16 and 17 after they failed to meet redemption requests.
Following the developments, authorities suspended transactions and ordered the liquidation of 131 funds managed by seven portfolio companies, with an estimated over $19 billion in assets and 455,758 individual investors affected.
In a probe expanded following the fund turmoil and focused on suspected market irregularities, 61 suspects have been remanded in custody so far, including prominent figures such as Tera Yatirim Holding Chairman Emre Tezmen, Tera executives Emre Alkin and Kerem Alkin, and Pusula Holding Chairperson Serdar Turhan.
Authorities also imposed asset freezes on 42 individuals, 45 companies, and 19 investment funds, later lifting restrictions on the companies and funds while keeping those on the individuals in place.
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