HighIV Macro Policy & Sovereign Debt20 October 2026, Tuesday · 11:20 TRT (UTC+3)
Şimşek says fund outflows have stopped, and Istanbul stocks rally hard
Treasury and Finance Minister Şimşek said on 20 October that net outflows from funds had reached 647 billion lira since the start of September and had largely stopped as of last Friday. The BIST 100 rose 3.22% the same day to close at 11,798.
Speaking on a joint Bloomberg HT and Habertürk broadcast on 20 October, Şimşek said 66 of the 131 funds in liquidation had been wound up. Anadolu Agency reported that 3 of the 7 portfolio companies had completed liquidation, transferring a total of 40.8 billion lira to 45,747 accounts. Equity-heavy funds managed to repay an average of 58% of their portfolio value as of 17 September. The minister said Hedef Portföy, which runs 31 funds and 23,925 accounts, would move into ordinary liquidation this week, leaving 4 of the 7 companies closed by the weekend.
Foreign investors accounted for 287 billion lira of the outflow. Over the same period lira deposits rose by 685 billion lira, lifting their share of total deposits to 62%. Şimşek put banks' direct exposure to the troubled funds at 1.3 billion lira against assets of 56 trillion lira and said there was no systemic risk. Corporate bonds maturing before year-end total 26.5 billion lira, in a market of roughly 1 trillion lira. The Credit Guarantee Fund is discussing a package with banks to cover those maturities; the Treasury has said it will provide neither guarantees nor public money.
The remaining 3 companies, Tera, Pusula and Atlas, are in extraordinary liquidation, a process that depends on new legislation. Once the law passes, the aim is to close about 390,000 accounts with interim payments of up to 1 million lira. Clawback will target first those who booked real gains of 10 million lira or more. Sources disagree on the status of the 66 funds: AA wrote that all 66 had been fully liquidated, while Bloomberg HT said they were in ordinary liquidation. The binding constraint has shifted. The liquidity problem has eased, but the fate of the remaining 390,000 accounts now hangs on the parliamentary calendar.
Talay assessment
Bottom line
The liquidity leg of the fund crisis is closing: outflows have stopped, 66 funds have been settled and the stock market recovered 3.22% on 20 October. The risk still open is legal and political, since payouts to 390,000 accounts depend on parliament passing the law. Keeping public money out protects the budget but leaves clawback litigation to carry the burden of restoring investor confidence. The most likely path is the law passing in November and the crisis moving from the market to the courts.
Likely effects
- Equity marketPositiveWeeks
Part of the ground lost over two days to the MSCI decision and the dismissal of agency heads was recovered on 20 October; whether it holds depends on foreign selling staying halted.
- Deposits and the liraPositiveWeeks
With 685 billion lira of fund money returning to lira deposits, the CBRT finds it easier to manage currency pressure while cutting rates on 22 October.
- Corporate bondsNegative1–6 months
With fund demand gone, the 26.5 billion lira maturing before year-end carries refinancing risk; the Credit Guarantee Fund package is being discussed to address it.
- Public financesUncertain1–6 months
The Treasury has ruled out guarantees and public money, which keeps any direct cost off the budget deficit.
Possibilities, ranked
- 1Law passes, liquidation closes55%
The extraordinary liquidation law passes in November, payments of up to 1 million lira begin and pressure on equities eases.
Watch: The plenary vote on the liquidation bill in parliament and the first interim payment announcement
- 2Legal process drags on30%
Clawback suits and the investigation widen, and payments at the 3 companies in extraordinary liquidation slip to year-end.
Watch: No payment schedule announced for Atlas, Tera and Pusula
- 3Contagion reaches credit15%
Repayment problems emerge on maturing corporate bonds and the Credit Guarantee Fund package is delayed.
Watch: Default or rescheduling news on the 26.5 billion lira of bonds maturing before year-end
Probabilities are calibrated judgement based on the sources, not measurement, and are revised as new information arrives. Not investment advice.
Market reaction
Indicators affected
- BIST 100 close▲ +3.22%
- Net fund outflows (since September)▼ 647bn lira
- Rise in lira deposits▲ +685bn lira
- Fund liquidations completed▲ 66/131