Turkiye has avoided systemic risk from stress in its asset management sector, Finance Minister Mehmet Simsek said on Thursday, adding that the fund crisis may have a short-term limited impact on sentiment but remained contained.
Simsek, speaking via videolink at an S&P Global emerging markets conference in London, said Turkiye has a better regulatory framework to prevent a recurrence of similar issues.
He said the stress in a relatively small part of the asset management business is a short-term issue and limited to a number of mainly private funds. Turkiye has a much better regulatory framework to prevent a repeat of such issues, he added.
Steps taken by the authorities to stop the contagion to the rest of the financial system have been largely successful and additional regulations for funds are probable, he said.
Underlying inflation is moving in the right direction, with strong agricultural output this year is likely to help ease food price inflation, but higher energy prices carry a cost but challenges will remain manageable, Simsek said.
Turkiye is negotiating a free trade agreement with the Gulf Cooperation Council members and the current geopolitical backdrop is potentially creating conditions to sign a deal, he said.
Separately, Turkiye's market regulator (SPK) said on Thursday it would begin making interim payments to investors in more than 100 funds that were ordered to shut down this month after a market-manipulation scandal triggered heavy losses and redemption pressure.
According to a bulletin published overnight, investors in asset managers Tera Portfoy, Pusula Portfoy, Atlas Portfoy and Hedef Portfoy will receive their full net investment amount if it is below 1mn lira ($20,404.79). Investors whose net investment amount is 1mn lira or above will receive 1mn lira as an interim payment.
The procedure will start with money market funds, the SPK said.
In a separate statement, the SPK said the Savings Deposit Insurance Fund (TMSF) opened up "voluntary refund accounts" for those who want to voluntarily return "excessive gains" made as a result of fund sales carried out before liquidation of the funds.
Under Turkish legislation, financial manipulation offences can be pardoned or sentences can be reduced if a person "shows remorse" by paying to the Treasury twice the amount of the benefit they obtained.
Turkiye's fund crisis erupted after suspected price manipulation in a number of thinly traded stocks triggered heavy losses and redemption pressures at investment funds.
Almost half a million investors hold stakes in more than 100 Turkish investment funds with combined assets of $20bn that authorities ordered to be liquidated this month.
