MSCI Inc. has frozen changes to its Turkey equity indexes and increased scrutiny of the market following a crisis in the Turkish fund industry. Effective immediately, the freeze halts updates resulting from index reviews and corporate events until further notice. It affects the addition of new securities and increases in foreign inclusion factors.
The decision follows concerns from institutional investors that possible coordinated trading among smaller listed companies could distort free-float estimates and undermine market integrity. Turkish regulators have been cracking down on investment firms that allegedly inflated share prices by concentrating bets in illiquid stocks.
MSCI said that if it sees insufficient progress on reforms and enforcement by June 2027, it will consider consulting on a possible reclassification of the MSCI Turkey Indexes. Turkey could be downgraded from emerging-market status to frontier-market or standalone status, potentially prompting significant selling by funds tracking MSCI emerging-market benchmarks.