Unlike sovereign wealth funds around the world, Turkey’s version wasn’t established to manage investment funds — it was set up as a shareholder in public institutions. The fact that nearly all of its portfolio companies are traded on BIST makes their market valuations critically important. Since the fund was designed as an unsupervised, unaccountable borrowing vehicle — essentially an alternative pocket for the Treasury — the market value of its holdings carries outsized significance.
The fund uses its liquid resources to support BIST and BIST-derivative instruments on VİOB, artificially propping up market values — and by extension, the collateral value backing foreign-sourced borrowing. This is a dangerous practice that runs contrary to market principles, and it’s hardly sustainable. Lending institutions understand this; they’ll inevitably demand higher collateral ratios or keep loan-to-value (LTV) ratios low. As in every market, opaque practices always come back as higher risk premiums and heavier collateral requirements.
Most concerning of all: retail investors drawn in by the market’s apparent rise risk being caught in this artificial environment — and facing much larger losses down the road. Neither inflation, nor exchange rates, nor unemployment, nor stock market index levels reflect economic reality.
