Turkey passes law on liquidating frozen investment funds amid investor delays

what happened

Turkey's parliament has passed a bill setting out how frozen investment funds will be wound up, Reuters reports. The measure was approved on Thursday evening, about a month after regulators ordered the funds closed. For investors holding large sums, however, it is still unclear how much they will get back.

Payments will be adjusted for inflation, and interim payouts of up to 1 million lira (about $20,110) are allowed. Still, it is not known how much owners of bigger positions will recover from assets that authorities suspect were artificially inflated in price.

Savers describe growing anxiety. A 29-year-old engineer from Istanbul says he put around 5 million lira into several funds, including money from selling gold savings, and had planned to buy a home. Another investor says more than 10 million lira went into the funds, money her family was using to pay for her husband's cancer treatment, and they are now living on credit cards. Finance Minister Mehmet Simsek said about 390,000 investor accounts would receive repayments.

Nearly half a million investors held stakes in more than 100 funds that regulators ordered liquidated in September. Authorities say winding up has finished for 84 of the 131 funds initially frozen, and their investors have already been paid.

why it matters

For markets, the episode highlights risks in Turkey's fund sector and the willingness of regulators to intervene in locked-up assets. Trust in local investment vehicles, and in how authorities handle suspected manipulation, may stay under pressure until the scale of payouts becomes clear. Lira savings and gold-linked products are the most exposed to sentiment.

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