Turkey’s sovereign wealth fund (TWF/TVF) on May 22 intervened aggressively in THE stock, domestic bond and eurobond markets, local business daily Ekonomi reported on May 23.

On May 21, the 36th civil chamber at the Ankara regional (istinaf) court (an appeals court that works above courts of first instance and below the supreme court (yargitay)) stripped Ozgur Ozel of his leadership of the main opposition Republican People’s Party (CHP) and reinstated his predecessor Kemal Kilicdaroglu.

On May 22, the political atmosphere in Turkey was relatively calm, with both Ozel and Kilicdaroglu opting to not escalate tensions.

On May 24, tensions escalated after police officers pushed to enter the CHP party headquarters in response to an application filed by a lawyer of Kilicdaroglu. 

Poured-in liquidity

The interventions executed by the TVF triggered a sharp 5% rebound on Borsa Istanbul on May 22, following the 6% collapse a day earlier, and held off a collapse on the debt markets, according to Ekonomi.

Trading volumes were conspicuously high while BIST-30 index components (blue-chip stocks), in particular, delivered a significantly stronger performance.

Analysts also remarked on how the TVF typically intervenes during periods of sharp market declines. They recalled that a similar pattern was observed during the market turmoil seen after Istanbul mayor Ekrem Imamaoglu was arrested on March 19, 2025.

Another market expert emphasised that all financial institutions entered the current period highly prepared for impacts of the expected court ruling. They coordinated measures deployed across all fronts to prevent a repeat of the March 19 scenario.

Prevented fallout

On May 21, Bloomberg quoted unnamed traders familiar with transactions as saying that government-run banks sold about $6bn to defend against lira fallout on the day of the court ruling. As a result, the USD/TRY remained in the 45s.

Despite intervention efforts, yields on the Turkish government’s lira bonds climbed by a few percentage points. Turkey's 5-year credit default swaps (CDS) rose by about 20-bp to the 260s. Eurobond spreads showed similar reactions.

Margin calls on the Borsa Istanbul derivatives market (VIOP) hit a record high of Turkish lira TRY 3.6bn. 

Selling opportunity for foreign investors

Unnamed market analysts and brokers also told the daily that the dramatic U-turn in equities and the calm seen in debt papers were engineered by heavy and coordinated intervention by the TVF.

The government-run vehicle poured liquidity into equities, domestic government bonds and sovereign eurobonds ahead of a nine-day-long public holiday, calming stress among local and international investors.

Unnamed analysts also noted that the interventions provided a selling opportunity for foreign investors who opted to cut their Turkey exposure amid fast widening uncertainties as regards the period ahead.

Almost perfect timing, but only almost

Turkey will celebrate the Islamic Eid al-Adha (Feast of the Sacrifice) between May 27 (Wednesday) and May 30 (Saturday). As usual, the government has declared a nine-day public holiday. It is to take place between May 22 (Friday) and June 1 (Monday).

Borsa Istanbul will be open on May 25 (Monday) and for the morning session only on May 26 (Tuesday). However, almost all Turks will be on holiday and the government (with its public banks and sovereign wealth fund) will easily prevent sharp fluctuations in local markets.

From the perspective of the markets, the timing of the latest CHP operation was, as usual, almost perfect, coming just prior to the long religious holiday. It is, however, only “almost” perfect – an open question remains as to why the 36th chamber did not release its ruling on May 22 after the market close.

Given the love of speculation in Turkey, every man and his dog produces a theory about the reasoning behind the decision that brought the announcement of the ruling 25 hours earlier than the May 22 market conclusion. None of the theories in circulation are, as per usual, solid enough to mention.

June 1, back from holiday

A volatile trend could resurface after the public holiday as downward trends have resumed three to four business days after interventions in previous instances, Ekonomi also quoted unnamed analysts as saying.