MSCI froze changes to its Turkey equity indexes on Thursday, citing concerns over market integrity and potential coordinated trading. The index provider warned of a possible downgrade to frontier-market status if sufficient progress is not made by mid-2027.
MSCI's decision to freeze changes and warn of a potential downgrade could trigger selling by funds tracking emerging-market indexes, impacting Turkey's equity market status and investor confidence.
MSCI on Thursday froze certain changes to its Turkey equity indexes, stating it requires more time to assess market reforms and warning of a potential downgrade to frontier-market status if sufficient progress is not achieved by mid-2027. The decision, effective immediately, impacts index reviews and corporate events involving Turkish securities. MSCI cited concerns over "possible coordinated trading through fund holdings closely affiliated with certain smaller listed companies," which could undermine free-float estimates and market integrity. The index provider stated that institutional investors need to see credible and sustained enforcement against coordinated trading and improved disclosure standards for free-float verification. Turkey's benchmark BIST 100 index is down more than 20% from its May record high, marking its fifth straight weekly decline. S&P Dow Jones Indices had also warned in July about Turkey risking a downgrade due to market transparency concerns.
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