Turkey’s sovereign wealth fund buys blue-chip stocks to stabilize market after fund sector meltdown

Turkey’s sovereign wealth fund stepped into the stock market on September 17, buying blue-chip equities to arrest a brutal selloff that had erased roughly 8-10% from the benchmark BIST 100 index in just two to three trading sessions. The culprit wasn’t geopolitics or a currency crisis this time. It was something more mundane, and arguably more alarming: a wave of redemption defaults rippling through the country’s investment fund sector. Türkiye Varlık Fonu, known as TVF, executed its purchases through an exchange-traded vehicle managed by state-owned Ziraat Portföy, targeting constituents of the Borsa Istanbul 30 Index. What triggered the selloff The crisis started in a corner of the market that rarely makes international headlines: Turkey’s portfolio management industry. Several fund managers, including Tera Portföy and Pusula Portföy, defaulted on investor redemption requests. Regulators responded by suspending trading in funds from seven managers and initiating the liquidation of 130 to 131 funds. Those funds collectively held assets exceeding TL 890 billion, roughly $18.3 billion. The government’s multi-pronged response TVF’s equity purchases were just one piece of a coordinate...