Turkish economic confidence slips below 100 as fund payouts begin

According to TurkStat's data of 30 October, the index fell from 101.3 in September to 97.3. Consumers drove the decline, with consumer confidence down 7.7% in a month to 84.8. Real-sector confidence fell 1.4% to 101.1 and services confidence 2.4% to 109.2. Retail rose 1.1% to 112.5 and construction 0.4% to 83.3. Three of the five sub-indices declined, and households took the largest hit.

CNBCe links the October drop to the fund crisis; TurkStat's five sub-index data gives no such cause. The crisis began when the CMB placed 131 funds belonging to seven portfolio management companies into liquidation on 17 September. According to Vice President Cevdet Yılmaz, 68 billion lira had been paid to 71,899 accounts in 93 funds by 23 October. On 30 October interim payouts of up to 1 million lira per investor began through İş Bankası and Ziraat Bankası. Takvim reports that the first tranche will pay 29.3 billion lira in total to 235,705 investors in seven funds. The same report puts net investment at 125 billion lira but does not explain what that figure covers. The payouts are expected to be completed by mid-November.

The BIST 100 lost 405.88 points that day and closed at 10,759.56, its intraday low. Of the 100 stocks in the index, 89 fell, on turnover of 112 billion lira. Mining was the hardest-hit sector, down 9.86%. CNBCe puts mixed US tech earnings and the possibility of a Fed hike at the top of the selling. Attributing the one-day fall solely to domestic factors would therefore be wrong. The sources diverge on one point: the AA bulletin says all sector indices fell, while CNBCe reports the insurance index rose 1.96%.