Investors in Turkey want one thing above all else: for their money to retain its value.
asserted
money → want → value
Given inflation of around 30%, that is not exactly easy.
asserted
that → give → %
As a result, many people are buying gold, foreign currency or stocks and increasingly, mutual fund shares that promise high returns.
asserted
that → buy → returns
But the stock market has become a trap for around half a million Turkish investors.
asserted
market → become → investors
In mid-September, the benchmark BIST 100 index plummeted by 6% in a single day and lost about 12% within just a few trading days.
asserted
index → plummet → days
This sharp drop in stock prices was triggered by a major market manipulation scandal.
asserted
drop → trigger → scandal
Approximately 455,000 investors have been affected, more than 45 people have been arrested and a high-ranking politician from the ruling Justice and Development Party (AKP) has resigned.
asserted
politician → affect → Party
What happened?
asserted
What → happen → ?
Everything started when some investment fund providers had trouble making timely repayments to investors.
asserted
providers → start → investors
Among those affected were funds managed by the companies Pusula Portfoy and Tera.
asserted
funds → affect → companies
Two Tera funds alone held assets totaling around €6.5 billion ($6.37 billion).
asserted
funds → hold → billion
In response, the Capital Markets Board (SPK) intervened and shut down the funds of seven asset managers, including Tera, Pusula and Atlas.
asserted
Board → intervene → Tera
According to the state-run news agency Anadolu, a total of 131 funds are set to be liquidated.
uncertain
total → accord → funds
The Istanbul Public Prosecutor's Office is now investigating charges of fraud, violations of the capital markets law and the formation of a criminal organization, Justice Minister Akin Gurlek announced.
asserted
Gurlek → investigate → organization
The suspicion: The fund companies are alleged to have artificially inflated the value of their funds, while in reality their funds contained worthless "junk stocks."
asserted
funds → allege → stocks
Among the 45 people arrested so far are executives from investment firms.
asserted
executives → arrest → firms
In addition, the assets of 42 individuals and 46 legal entities have been frozen, according to Gurlek on X.
The Istanbul Stock Exchange has also taken action: it excluded 27 stocks from the BIST 100 benchmark index as of October 1.
uncertain
it → freeze → October
Will investors get their money back?
asserted
investors → get → money
The funds are being liquidated: Their assets will be sold and the proceeds distributed to investors in proportion to their fund shares.
asserted
proceeds → liquidate → shares
The deadline for this has been extended from three to six months.
asserted
deadline → extend → months
According to Aysel Gundogdu, an independent financial advisor in Istanbul, this is intended to reduce selling pressure so that stocks are not sold at fire-sale prices.
uncertain
stocks → accord → prices
However, this does not mean that the liquidation of each fund will take six months.
asserted
liquidation → mean → months
Depending on market conditions, it may be completed more quickly.
uncertain
it → depend → conditions
An investment fund is not a savings account and any loss in value affects the investor.
asserted
loss → affect → investor
Gundogdu expects that money market funds will largely be redeemed.
asserted
funds → expect → ?
With hedge funds and equity funds holding "junk stocks" that are virtually untradeable, however, the situation could prove more difficult.
uncertain
situation → hold → stocks
It is important to distinguish between market losses and damages resulting from potential irregularities.
asserted
It → distinguish → irregularities
Economist and columnist Guldem Atabay emphasized that a distinction must be made between price losses and manipulation: Investors bear the market risk, but they do not have to accept false information, artificially inflated prices, or a lack of oversight.
asserted
they → emphasize → oversight
If funds are closed or liquidated, the shares and other securities in the portfolio can be sold.
asserted
shares → close → portfolio
The question is how much they are worth and how easily they can be sold.
asserted
they → sell → much
Financial expert Gundogdu believes that the fund's assets will not cover investors' claims.
uncertain
assets → believe → claims
Furthermore, she says there have been structural failures.
asserted
she → say → ?
She therefore considers it possible that the assets of the fund founders and managers could also be tapped to make up for the shortfall.
uncertain
assets → consider → shortfall
Economist Atabay calls for those responsible to be identified and for the damages to be recovered from them.
asserted
damages → call → them
Following the liquidation of the funds, it must be clarified who is responsible for any legal violations.
asserted
who → follow → violations
"Liquidation is no substitute for accountability," Atabay said.
asserted
Atabay → say → accountability
The crisis has already led to the resignation of a high-ranking female politician in the ruling AKP party.
asserted
crisis → lead → party
Fatma Betul Sayan Kaya, deputy party chair and former minister of family affairs, asked Turkish President and AKP leader Recep Tayyip Erdogan to "relieve her of all her posts."
asserted
Kaya → ask → posts
This has been a phrase frequently used within the AKP for years when someone is forced to resign.
asserted
someone → use → years
She was facing allegations regarding stock transactions by her and her husband, Ilyas Kaya, in connection with the fund crisis.
asserted
She → face → crisis
…and 6 more, not listed.
The Aporia
