Borsa Istanbul purges more than a quarter from the main index due to fund-driven fallout

The exchange announced on Tuesday that it will replace over a quarter of the BIST-100 index constituents, which is its largest reshuffle in six years, since it introduced new rules for market'structure.

The exchange didn't give a reason why the reshuffle would take place in October. Turkey's Capital Markets Board has introduced limits on the concentration of hedge funds after last week's sharp sell-off, which was a result of new rules that created liquidity pressure in investment funds.

Recent changes in the way regulators calculate free-float rate have left some fund holdings out.

The exchange announced that Destek Finans, a factoring company, and Katilimevim, a financing firm, will be removed from the BIST 100, while Anadolu Grubu Holding, a conglomerate, and TAB Gida, a fast-food retailer, will be added after they were previously removed.

Esenboga, Isiklar, Enerji, Yapi, Holding, and Odine Teknoloji will be also removed.

Destek Finans is also leaving the BIST-30 to join TR Anadolu Metal.

The BIST-30 are exempted from the new limits on concentration, but removing a stock will require that funds be used to reduce holdings.

FUND INVESTIGATION

The benchmark for Tuesday's trading was flat, at 0710 GMT. It is up just 0.4% this week after falling about?8% the previous week.

The Capital Markets Board, as part of its intervention to stabilize the market, mandated that Isbank and Ziraat Bank supervise the liquidation of the 131 investment funds, managed by seven companies, including Tera Portfoy, Pusula Portfoy, and Hedef Portfoy on the TEFAS electronic fund trading platform.

These funds have a large position in Destek Finans, which is being removed from indexes.

(source: Reuters)