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Türkiye’s Capital Markets Board is preparing new restrictions on investment funds that focus heavily on affiliated companies, as regulators move to address rising concerns over market manipulation and price distortion, a report suggested.
According to a draft document reviewed by Bloomberg, the proposed framework would limit how much a fund can invest in related parties while also putting caps on highly concentrated portfolios.
The move comes as authorities zero in on a strategy that funnels large amounts of capital—often backed by borrowing—into a tight circle of closely linked firms. In some cases, these include companies brought to market by the same group, along with positions in the parent company’s own shares.
At its core, the model builds on a self-reinforcing loop. Fund buying pushes up the prices of affiliated stocks, which lifts the fund’s net asset value and boosts its performance. That, in turn, makes the fund business look more attractive, drawing in fresh capital that is again deployed into the same set of stocks.
As more money flows into the system, valuations rise across both the fund and the parent company, reinforcing the cycle at each step.
The strategy has drawn scrutiny due to its heavy use of leverage and focus on stocks with limited free float. Such conditions may magnify price swings and, at times, create misleading signals around supply and demand, the report noted, citing analysts related to the matter.
The debate has intensified following the sharp rise of local brokerage Tera Yatirim, highlighted as a key example in Bloomberg's report.
The company’s shares have surged more than 40,000% since its 2022 initial public offering. As of Friday, its market capitalization stood at ₺182.2 billion ($4 billion), placing it among Türkiye’s largest listed firms despite its relatively small scale. The total size of the company’s 20 TEFAS-listed funds amounts to ₺288.65 billion ($6.4 billion).
The report pointed to a strategy centered on concentrated bets in affiliated companies, often supported by significant borrowing. By directing capital into a narrow group of stocks, the model appeared to amplify gains through the same feedback loop regulators are now examining.
Tera Yatirim founder Emre Tezmen pushed back on the claims, telling Bloomberg the firm operates within regulatory boundaries. He dismissed concerns over low free-float investments funded by short-term debt, arguing that stock prices cannot be controlled in the way critics suggest.
Treasury and Finance Minister Mehmet Simsek signaled last November that authorities are working on new measures to strengthen oversight, adding they are aware of manipulation risks linked to certain funds, without naming specific firms.
"We know that manipulations are being carried out, particularly through certain funds, and we are aware of the lack of regulation in that area," Simsek said, adding that gaps will be closed and enforcement will be intensified.
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