Turkish stocks fell more than 3 percent during Monday’s trading as police detained nine more people in an investigation into investment funds and share trading, though the market recovered some ground before the close.
The BIST 100, the benchmark index of shares traded on Turkey’s main stock exchange, dropped as much as 3.44 percent during the session. It closed at 12,592.76 points, down 2.38 percent. All sector indexes fell, with shares in financial leasing and factoring companies recording the largest decline, at 8.73 percent.
Monday’s detentions involved people connected to Destek Holding and shipping company Özata Denizcilik, according to the state-run Anadolu news agency. Police caught seven during the operation and found two others later. Prosecutors allege manipulation involving shares in the companies.
In another part of the investigation, police sent 12 people already in custody to an İstanbul courthouse for questioning. Courts had previously jailed 51 suspects pending trial, including executives of investment and portfolio management companies. The nine people detained Monday have not been added to that jail count.
The investigation grew out of a crisis at funds that had invested heavily in shares with few available buyers. As investors sought to withdraw their money, some managers struggled to raise cash. Sales of more readily traded shares then spread pressure across the stock market.
Turkey’s Capital Markets Board (SPK), the securities regulator, has ordered the liquidation of 131 funds managed by seven firms. They held investments belonging to 455,758 people and assets reportedly worth about $18 billion.
Prosecutors lifted asset restrictions on 45 companies and 19 funds over the weekend. That decision did not cancel the liquidation order or end the criminal investigation.
Treasury and Finance Minister Mehmet Şimşek pledged Monday to continue measures to supply liquidity to the market and protect investors’ lawful rights. He said authorities would pursue people involved in market-distorting transactions but would take no action against people and companies unconnected to them.
The fund crisis was one source of pressure on Turkish shares Monday. Global markets also fell amid renewed tension over Iran and the Strait of Hormuz, a shipping route for oil, which raised concerns about energy prices and inflation.
