Turkish stocks slide as investors withdraw $1B in fund run

Turkey’s stock market just had one of its worst days in recent memory, and the trigger wasn’t geopolitics or an interest rate shock. It was a good old-fashioned bank run, except the banks were investment funds.

The BIST 100 index, Turkey’s benchmark equity gauge, cratered 5.54% on September 16 to close at 13,122.58. At its worst point during the session, the index was down 7.7%. Retail investors yanked roughly $1 billion, approximately 550 billion Turkish lira, from local investment funds in a single day. Two prominent asset managers couldn’t keep up with the flood of withdrawal requests, and panic did the rest.

How a regulatory fix broke the market

Turkey’s Capital Markets Board, known locally as the CMB or SPK, had recently imposed tighter rules on fund managers. The regulations targeted a specific practice: funds loading up on illiquid, low-free-float stocks, often tied to affiliated parties, to juice their reported returns. Global index providers, including MSCI, had flagged transparency concerns around these concentrated holdings. That prompted the CMB to act, lowering ownership disclosure thresholds and capping single-stock exposure within funds.

The new restrictions forced fund managers to start unwinding positions in stocks that, by definition, had very few willing buyers. When holders of illiquid assets are all forced to sell at the same time, you get a liquidity mismatch. When retail investors notice the stress and start pulling their money, you get a run.

Two firms at the center of the storm

Pusula Portföy, an asset management firm overseeing roughly $13 billion in assets, was the first domino. The firm defaulted on redemption requests for certain funds on September 16, meaning investors who wanted their money back were told, effectively, “not today.”

Tera Portföy followed shortly after, with defaults totaling 366 billion lira, approximately $7.5 billion. Since late August 2026, Turkish funds have hemorrhaged approximately 128.7 billion lira, about $2.7 billion, as the regulatory changes began reshaping the investment landscape. The September 16 exodus was the crescendo of a trend that had been building for weeks.

Emergency meetings and what comes next

Turkey’s Financial Stability Committee scheduled an emergency meeting for September 17, the day after the crash. The structural problem is straightforward but difficult to solve quickly: fund managers built portfolios around stocks that trade in small volumes, regulations now require them to reduce those positions, but selling illiquid stocks in size craters their prices, which erodes fund values, which triggers more redemptions, which forces more selling.

Temporary redemption gates, backstop liquidity facilities, or accelerated restructuring of troubled funds are all tools available to the committee. The $2.7 billion in cumulative outflows since late August suggests that investor patience was already thinning before the acute crisis hit.