Details of the sharp decline and liquidity crisis in Borsa Istanbul revealed
Following the sharp 5.54% drop at Borsa Istanbul on September 16, experts drew attention to the liquidity squeeze in illiquid stocks and the domino effect on funds.
The BIST 100 index losing 5.54% to fall to 13,122.58 points on September 16 at Borsa Istanbul brought liquidity risks in capital markets and the squeeze in illiquid stocks to light. Experts drew attention to supervisory shortcomings and the impacts of the crisis.
Sharp Selling Wave in Borsa Istanbul
The sharp selling wave experienced at Borsa Istanbul on September 16 re-exposed the risks that had accumulated in capital markets for a long time. While the BIST 100 index completed the day with a 5.54% loss at 13,122.58 points, a index-based circuit breaker was implemented after losses exceeded 6% during the day.
Illiquid Stocks and Liquidity Pressure
Transactions concentrated in stocks with low free float and weak liquidity increased investment funds' need to convert into cash. The spillover of selling pressure to more liquid assets demonstrated how interconnected the market is and how liquidity tightening has become generalized.
Domino Effect Warning from Economist Yılmaz
Economist Bilhan Elif Yılmaz stated that prices multiplied when company shares with low public float were included in free investment funds. Yılmaz expressed that the problem spread to the broader market along with the funds' demands to convert into cash.
Crisis Evaluation from Emre Şirin
Evaluating the unfolding picture, economist Emre Şirin emphasized that the crisis came in plain sight. Şirin argued that dependency on hot money and economic policies disrupted the balance between financial markets and the real economy.
Investors and Delayed Measures
While measures were increased following the sharp drop in the markets, experts stated that the steps taken were belated precautions. It was noted that small investors were affected the most by the process and that the investment mindset needs to be reviewed.