HSBC issues key assessment of MSCI's Türkiye warning
HSBC described MSCI's decision to freeze changes to its Türkiye indexes as a significant warning, while maintaining its "Overweight" recommendation on Türkiye.
The bank noted that MSCI's decision not to immediately initiate a review of Türkiye's emerging market classification has given markets additional time. HSBC highlighted concerns over a liquidity crisis involving investment funds, potentially coordinated trading activities, and the reliability of stock free-float ratios as key factors behind the decision.
HSBC warned that if sufficient progress is not achieved in market transparency and regulatory oversight by June 2027, MSCI could initiate a review that may result in Türkiye being reclassified as a frontier market or standalone market. The bank viewed the Capital Markets Board of Türkiye's (CMB) recent regulations targeting high-risk investment funds as positive in the long term, describing the current situation as conditional relief for Turkish financial markets.
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