Turkey’s primary stock index has entered a bear market, marking its most significant monthly decline since 2008. In September, a selloff initiated by struggling investment funds rippled through the broader market, resulting in a stark downturn.
Market Decline and Bear Market Confirmation
On Wednesday, the stock index closed down 2.79%, falling over 20% from its record closing value on May 11. This drop solidifies its status as a bear market, culminating in a 16.65% decline for the month of September. As the selloff gathered momentum on September 14, the market grew increasingly concerned about funds that were heavily invested in illiquid stocks. Analysts suggest that certain funds faced pressure to liquidate their holdings to fulfill redemption requests, further escalating the decline and encouraging additional withdrawals.
The week ending on September 18 proved particularly damaging, seeing the index drop over 8%. This marked the index’s worst weekly performance since March 2025, coinciding with significant political events, specifically the jailing of Istanbul Mayor Ekrem Imamoglu.
Regulatory Actions Amid Market Turmoil
In response to the market upheaval, the Capital Markets Board (SPK) took decisive action on September 17, ordering the liquidation of 131 funds, which managed assets exceeding $20 billion and catered to around 455,758 retail investors. This regulatory move aims to stabilize the volatile environment. Following these steps, the authorities intensified their investigation into potential market manipulation, with Justice Minister Akin Gurlek revealing that the number of suspects under scrutiny had reached 217, with 56 individuals currently imprisoned pending trial.
At the same time, Istanbul’s index comprising mid-tier companies performed better than the benchmark index at the beginning of 2025. However, the SPK’s recent restrictions regarding asset concentration in individual companies have significantly narrowed this performance gap.
Assessing the Damage and Future Outlook
The index suffered a staggering drop of nearly 35% in September—its worst monthly performance in terms of Turkish lira since its inception in 2009. Meanwhile, the blue-chip index, ranking the top 30 companies, fared somewhat better but still ended the month down 9.8%. In stark contrast, the broader index that includes the remaining top 70 stocks has been hit hard, witnessing 15 companies lose between 50% and 90% of their value in September alone, as reported by LSEG data.
This recent downturn has left investors anxious, with the lasting impact on Turkish financial markets still uncertain. Observers will closely monitor regulatory developments and potential recovery strategies as the market seeks stability in the coming months. The combination of market pressures and enhanced scrutiny is likely to shape both investor sentiment and the overall economic landscape in Turkey moving forward.