The ongoing scandal in Turkey involves allegations that investment management firms have been artificially inflating stock prices of small, illiquid companies, raising serious concerns about market integrity. The Capital Markets Board of Turkey noted that the investments could not be justified by the companies' financial fundamentals.
Following defaults reported by asset managers, including Pusula Portföy and Tera Portföy, the BIST 100 index fell by 16.7% in September. In response, the SPK ordered the liquidation of 131 investment funds managing approximately 1 trillion Turkish lira ($20.2 billion).
MSCI has now threatened to revoke Turkey's emerging market status, implementing a freeze on index-related changes for Turkish equities until credible progress is made in addressing these issues. This includes demands for improved transparency and enforcement against coordinated trading behavior.
If no significant improvements are observed by June 2027, MSCI may consider further downgrading Turkey's market classification. Additionally, Indonesia faces similar scrutiny from MSCI, with concerns about its market's investability and potential reclassification as a Standalone Market due to ongoing issues with shareholding transparency and suspected coordinated trading