BofA Securities says a large portion of September’s Turkey fund sell-off flowed
into bank deposits. BofA economist Hande Kucuk reports Tefas, the Turkish
electronic fund trading platform, saw net redemptions of about 743 billion lira
(roughly $15bn) in September. The Tefas figure covers the full mutual fund
universe through Sept. 16; 131 funds were later excluded after regulator-ordered
liquidations. Between Sept. 1–29 bank deposits rose about 950 billion lira, with
corporate deposits up roughly 884 billion; 63% of the corporate inflow was lira
and 37% foreign-currency, broadly matching recent dollarization trends. The
September fund-market shock drained hundreds of billions of lira from investment
funds and raised concerns about rising dollarization that could threaten
exchange-rate stability—important to Turkey’s strategy for fighting
inflation—though Kucuk says dollarization in September remained within a
manageable range. BofA expects residents’ foreign-currency-linked assets to have
increased by about $1.7bn.
