Türkiye is prioritizing the completion of troubled investment fund liquidations before permanent capital market reforms, Treasury and Finance Minister Mehmet Simsek said Oct. 20, as proposed interim payments await parliamentary approval.
In a joint interview with Bloomberg HT and HaberTurk, Simsek said authorities had liquidated 66 of the 131 funds in the process. They had also completed the liquidation of three of seven portfolio management companies. Simsek said authorities had paid 40.8 billion liras to 45,747 accounts under ordinary liquidation.
The amounts recovered have differed by fund type. Simsek said money market funds at the three companies whose liquidations are complete delivered an additional average return of 1.43% over their Sept. 17 values. Investors in equity-heavy funds recovered an average of about 58% of their Sept. 17 portfolio value, Simsek said.
Simsek attributed the 42% shortfall for investors in equity-heavy funds entirely to falling share prices. He said some share values had previously risen without support from the underlying companies’ fundamentals.
Small investors and money market funds would receive priority for further payments, Simsek said. A temporary measure before Parliament would allow interim payments of up to 1 million liras, depending on the resources available in each fund. He gave no firm date for its passage.
Once the liquidation process is complete, Simsek wants permanent changes to market oversight. He said authorities need stronger technical capacity to keep pace with complex automated trading and coordinated market activity. The planned reforms would also raise penalties for market manipulation and insider trading.
For now, the next decision rests with Parliament. The proposed interim payments depend on lawmakers passing the temporary measure.
