Turkey: Regulator requires private pension funds to raise holdings of Turkish stocks

• PPS firms required to allocate minimum 30% of state contribution to BIST stocks, same ratio was 10% previously
• State contributions in PPS reach TRY 50bn on Feb 3
• Authorities reportedly work on other measures to protect equities from quake fallout
• BIST to resume trading on Feb 15

Turkey's insurance and private pension watchdog SEDDK stepped in to support Turkish equities via adjustments in the regulation on the Private Pension System (PPS). The SEDDK said in a decree today that private pension funds will allocate at least 30% of the government subsidy over individual pension contributions to stocks traded on Borsa Istanbul (BIST). This lower limit was 10% previously. We remind that the government hiked the state subsidy over regular contributions to the PPS to 30% from the previous 25% in Jan 2022. The state contribution in the PPS reached TRY 50.0bn as of Feb 3, while accumulated funds by participants totalled TRY 354.8bn, according to data by the Pension Monitoring Centre (EGM). That said, today's decree means that at least TRY 15bn of state contributions in the PPS will be allocated toTurkish stocks.

In related news, Turkish authorities are designing more measures to support equities when trading on BIST begins on Feb 15, Bloomberg reported, citing an unnamed official with direct knowledge of the matter. It was claimed that the sovereign wealth fund TWF will support equities with a new, internal mechanism. In particular, the TWF's sub-fund - the Price Stability Fund, will reportedly receive capital from state lenders and use the cash to buy stocks in times of market volatility. Another speculation is that the government will exempt listed companies from the 15% withholding tax in share buybacks, while banks will be allowed to pay dividends on condition that some of those will be used for share buybacks, according to Bloomberg.

Trading on BIST was suspended on Feb 8, two days after two powerful earthquakes hit ten cities in southern Turkey. The trading was set to resume on Feb 15. It was earlier claimed that the authorities mulled extending the trading halt, but the idea was abandoned, according to the most recent media speculations. The main index of BIST - BIST 100, fell by 20% from its peak on Jan 2 to Feb 7. All trades on Feb 8 before the suspension were cancelled.