The recent developments in Turkish financial markets amid the investigation following allegations of manipulation and the process of liquidation of dozens of funds are having a varying impact on the economy, while the effects on the real sector are currently modest, analysts and the central bank suggest.

The probe into dozens of suspects in the past couple of weeks has uncovered what Turkish authorities call “a criminal organization” behind the crisis.

The scandal in September prompted authorities to order the liquidation of 131 investment funds that authorities suspect were manipulated and inflated in price. Nearly half a million ⁠investors held stakes in the funds.

A new analysis shared by the credit rating agency Fitch Ratings on Tuesday indicated that “turmoil impact varies” while flagging securities firms as most affected.

“Turkish securities firms face weaker revenue prospects as stock-market and asset-management turmoil reduces trading volume,” the agency said. It also noted that the market turmoil followed the defaults of two asset managers in the week to Sept. 18.

“It then spread to the wider market, with 131 investment funds, worth about TL 900 billion ($18 billion), put into liquidation,” it added.

Fitch also pointed out that local securities firms, particularly brokers, appear to be most impacted, but also said that “brokers with strong capital and liquidity, conservative margin lending, limited proprietary exposure and diversified franchises are better placed to absorb the market stress.”

It also suggested that, according to its estimate, the “direct exposure of the Turkish banking sector to the affected funds is negligible.”

“Market volatility and customers’ exposure to the funds could weaken asset quality, but any resulting deterioration should be manageable and is unlikely to have a major effect on banks’ credit profiles,” it also said.

Following the market-disrupting activities and a sell-off in Turkish stocks after some asset management companies struggled to maintain payments to investors, Turkish authorities have launched a comprehensive investigation, while also establishing a special board to follow the process and repayments to investors.

Separately, the Central Bank of the Republic of Türkiye (CBRT) said in a blog on Wednesday that developments in the fund market “can affect the real economy through various channels” but also noted that the current impact on the real sector remains limited.

“As of Sept. 15, 2026, approximately 3,000 real sector firms held a combined TL 116 billion in funds that are now being wound up,” the blog read.

Almost half of this amount, or TL 57 billion, was invested in money market funds, the blog said, with the remainder held in equity funds and other types of funds.

“The sectoral distribution of these firms shows no significant concentration in any particular sector,” it added.

Also questioning how significant these firms are in the broader economy, the CBRT said that the “affected firms account for approximately 1.2% of the real sector’s total assets, 0.6% of employment, 0.9% of turnover, 1.1% of exports and 0.9% of outstanding commercial loans.”

However, the importance of their fund investments varies from firm to firm, particularly in terms of short-term risks, it added.

The bank also noted that “the firms that invested in the affected funds still have access to credit.”

“We assess that the Central Bank of the Republic of Türkiye’s macroprudential policy actions on Oct. 1, 2026, to support macrofinancial stability and banks’ liquidity management have also contributed to this development,” it said.

“The CBRT’s measures to support banks’ liquidity management, along with regulations aimed at facilitating access to finance for SMEs and corporate bond issuers, may help contain potential risks. Meanwhile, further progress in the liquidation process could also help mitigate these effects,” the bank added.

Türkiye’s benchmark stock index BIST 100 was up close to 5% on Wednesday midday at 11.536,47 points following weeks of volatility after the fund crisis.

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The Turkish central bank resumed its easing cycle last month after an eight-month break, ⁠cutting ​rates by 100 basis points to 36% as it cited recent data and indicators confirming “the deceleration in the underlying trend of inflation.”

However, with the latest inflation reading on Tuesday and a slight increase in the annual reading as well as a stronger-than-expected monthly rise in prices of 2.58%, analysts and financial institutions are split in their expectations ahead of the bank’s December meeting.

Monthly inflation in October came in at 2.58%, above market consensus and our 2.4% call, driven by unprocessed food, energy, and clothing, researchers at Dutch banking giant ING said in a note.

They cited that downward trend stalls but still pointed out that the Central Bank of the Republic of Türkiye (CBRT) is “likely to continue its rate-cutting process in December as well.”

“In our view, October inflation is unlikely to be a game changer here,” they said.

They also noted that they continue to expect that annual inflation is likely to remain below 30% at the end of this year.

Official data shared on Tuesday by the Turkish Statistical Institute (TurkStat) showed that annual inflation ticked up to 29.77% in October, after 29.73% in September, when inflation dropped below 30% for the first time in nearly five years.

“Uncertainty surrounding oil prices – along with their spillover effects on other commodity prices – continues to pose risks to the inflation outlook in the near term,” ING said.

On the other hand, BBVA Research, citing the high energy prices and recent pressures on reserves, said it expects the CBRT to keep interest rates unchanged at its Monetary Policy Committee (MPC) meeting on Dec. 10.

It also said it has maintained its year-end 2026 inflation forecast for Türkiye at 30%.

Also, according to institutions polled by publication Matriks Haber, it said that Goldman Sachs also does not foresee an interest rate cut as it cited an acceleration in seasonally adjusted inflation and a decline in reserves.

Akbank, similarly, maintains its year-end policy rate forecast at 36% and does not expect a cut in December.

In the assessments of various institutions, the CBRT’s quarterly inflation report due for release on Nov. 12, along with November inflation data, energy prices, and developments in reserves, stand out as the primary factors that would shape the interest rate decision in December.

The general outlook suggests that, despite October inflation exceeding expectations, improvements in service prices and core indicators may create room for measured interest rate cuts.

However, cost pressures stemming from energy sources could continue to limit the scope for monetary policy action.

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President Recep Tayyip Erdoğan met with top South Korean executives from the technology, electronics, biotechnology, and chemical industries on Wednesday during his official visit to Seoul.

LG Electronics CEO Lyu Jae-cheol, Celltrion CEO Seo Jin-seok, SK Chemicals and SK Plasma CEO Jaehyun Ahn, and Hyundai Motor Group CEO Chung Euisun attended the meeting alongside their delegations at the hotel where Erdoğan was staying.

Erdoğan also received Samsung Electronics CEO Roh Tae-moon, Chemtronics Wits Chair Kim Bokyun, and Korea Electric Power Corporation (KEPCO) Vice President Chan-hyuk Chun, along with their respective delegations.

The Turkish participants included Energy and Natural Resources Minister Alparslan Bayraktar, Industry and Technology Minister Mehmet Fatih Kacır, AK Party Deputy Chair Halit Yerebakan, Investment Office President Ahmet Burak Dağlıoğlu, Foreign Policy Senior Adviser Akif Çağatay Kılıç, and Senior Adviser Zafer Çubukçu.

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U.S. stock futures were slightly down and other markets were mixed as the dollar weakened on Wednesday in response to big wins by Democrats in the midterm elections.

Stock index futures swooned as the results started to emerge but later ​trimmed losses on Wednesday, with S&P 500 futures down 0.5% and Nasdaq futures off 0.8%.

The U.S. dollar index, which measures the greenback’s strength against a basket of six currencies, was down 0.2% at a one-month low of 101.51.

Asian stocks were, meanwhile, mixed Wednesday as investors tried to ascertain the impact of a Democratic sweep of Congress that dealt a blow to President Donald Trump’s economic agenda as he heads into his final two years as president.

Equities and the dollar sank initially amid warnings that the result – which saw Republicans ousted in a so-called blue wave – could lead to gridlock on Capitol Hill after Trump warned that he would become “Mr Veto.”

Tech firms, already under pressure, were also hit by concerns about the future of data center building – a major bone of contention in many places.

Tens of millions of Americans cast their vote in the crucial polls pitched as a referendum on the White House amid anger at surging petrol prices, tariffs and the Iran war.

‘Potential legislative gridlock’

With Democrats winning key races to flip the House and Senate – including once-safe Republican seats – Chris Weston at Pepperstone flagged “the potential for legislative gridlock, fiscal brinkmanship, debt-ceiling disputes, and congressional investigations.”

However, he added that “the president would retain considerable executive authority, so the implications for individual sectors are far from straightforward.”

Trump threatened in a telephone interview with the CBS network on Tuesday to be “Mr Veto” and block any Democratic legislation if they win.

The prospect of Congress coming to a standstill weighed on the dollar and Treasury yields, with observers pointing out that such a scenario would restrict spending.

“Democratic control of Congress will make it harder for the White House administration to pass major partisan legislation. That could reduce the prospect of significant additional fiscal stimulus over the next two years,” wrote David Chao at Invesco.

“For Asia, the implications matter. Less fiscal stimulus could reduce upward pressure on US growth, inflation and Treasury yields, potentially easing some of the pressure that higher US rates and a stronger dollar have placed on Asian currencies and monetary policy.”

However, as the results came in, he offered a more conciliatory tone to the New York Times, saying he was “absolutely willing to accept those results” and expected to work out deals with Democrats.

That provided the queue for a bounce in some stock markets, as well as the dollar and Treasury yields.

Hong Kong, Shanghai and Seoul reversed losses, while Wellington and Manila were also up.

However, Tokyo, Sydney, Singapore, Taipei, Mumbai, Bangkok and Jakarta all fell.

While they managed to pare losses, tech firms remained under pressure as investors continue to fret over the AI investment boom and when firms that have pumped billions into the sector will eventually see returns, if ever.

AI outlook uncertain

Traders were also nervous about the outlook for the AI buildout, with many Democrats taking advantage of anger over data centre development.

“The concern isn’t that a Democratic governor automatically shuts the gates on data-center construction,” said Stephen Innes at SPI Asset Management.

“It is that a change in political leadership could alter the regulatory environment just as developers are committing enormous amounts of capital to projects dependent on electricity availability and predictable construction schedules.”

Japanese chipmaker Kioxia plunged more than 5%, while Advantest and SoftBank lost more than 3%. Seoul’s SK hynix and Samsung were also down.

Oil prices edged up as investors kept tabs on the Middle East after Trump confirmed U.S. strikes on Iran but played down speculation he was preparing to resume bombing after the election.

“We seem to be getting everything we want,” he told the Financial Times newspaper on Tuesday.

“I’m ready, we’re ready. We’re locked and loaded if we need to go, but there may be no reason for it.”

His Iranian counterpart Masoud Pezeshkian said his government was still trying to resolve the crisis “through dialogue,” adding that “no one will benefit from this war” if it reignited.

However, Iran’s chief negotiator, Mohammad Bagher Ghalibaf, said the Islamic republic was “ready for battle with its finger on the trigger,” while Deputy Foreign Minister Kazem Gharibabadi said Tehran retained the right to “legitimate self-defense.”

He later posted on X that “Americans said NO TO WAR, and we endorse this message.”

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Top German auto parts supplier Schaeffler, whose customers include major European car brands, announced Tuesday that it planned to cut almost 3,500 jobs and close five sites in Europe as the crisis gripping the region’s car industry deepens.

Like other German carmakers and suppliers, the group has struggled with competition for its key products, which include ball bearings and electric vehicle parts, especially from Chinese manufacturers.

Three-quarters of the 3,460 job cuts and four of the five site closures will be in Germany, the company said in a statement, pointing to “above-average” labor costs in Europe’s top economy.

The cuts, to be completed by 2028, are about 3% of the group’s global workforce of almost 110,000, and should result in annual savings of about 300 million euros ($336 million) from 2030, it said.

Schaeffler said in a statement that it was “responding to the persistently challenging environment in the automotive industry.”

The company cited “an overall downturn in the market and intensifying competition … characterized by weakened demand for internal combustion engine vehicles and a delayed ramp-up of electric mobility,” it added.

The cuts would mainly focus on production and research and development.

The sites set for closure are in Berlin, Dortmund and two other towns in western Germany. A small site in Belgium will also be shuttered.

There will also be job cuts at sites in France and Slovakia.

Schaeffler said some of the job losses would be offset by the creation of positions in “future-oriented fields,” such as humanoid robotics and defense.

While not as well known as the car titans they work with, such as Volkswagen, BMW and Mercedes-Benz, the German supplier is a crucial part of the auto ecosystem, providing everything from braking systems to in-car electronics.

But as automakers have fallen into crisis, battling Chinese competition, high production costs at home and weakening demand, suppliers have been hit hard.

Volkswagen is planning to cut about 120,000 jobs across its brands by 2030.

German industrial giant Bosch, the world’s largest supplier of car equipment, announced 13,000 job cuts last year, mostly in its auto division.

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Australia’s central bank hiked its key interest rate to an 18-year high on Tuesday, citing the prolonged war in the Middle East and elevated inflation.

In a statement, the Reserve Bank of Australia (RBA) said it would raise its cash rate by 25 basis points to 4.85%.

“Inflation remains elevated,” it said. “This partly reflects higher fuel and other commodity prices affected by the conflict in the Middle East.”

“AI-related investment is driving rapid growth in prices for technology-related goods, and inflation in many goods and services remains high.”

This marks the fifth increase this year, adding to household cost-of-living pressures by increasing home mortgage payments, a politically potent topic in Australia.

It brings rates to a level not seen since late 2008, at the height of the global financial crisis.

“There continue to be heightened uncertainties about the outlook for domestic economic activity and inflation,” the RBA warned.

“Global oil supply disruptions are maintaining upward pressure on global and domestic energy prices and inflation. A period of prolonged uncertainty may also cause growth to be lower overseas and in Australia,” it added.

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