Almost all of the investors, brokerage house employees and analysts in Borsa Istanbul, formerly known as the ISE, were describing the earthquake that took place last week, saying, “We have not experienced such an event since the establishment of the stock exchange.”
As in the world stock markets, there were collapses called “earthquakes” from time to time due to political or economic crises in Borsa Istanbul. It is also a common occurrence that the shares of a company are skyrocketed for a few days due to speculation and then crashed to the bottom, causing those who invested in that stock to be devastated. However, it was against the nature of the goods that they were traded from the ceiling for a month, especially in public banks, even though there was no positive development. While the intermediary institutions of the banks, Takasbank, increased their collateral by saying “There is a risk here”, which raises the collateral, Capital Markets Board (CMB) did not take any steps despite the fact that the leveraged market was trading at such risky rates and that it would explode at some point. As a result, the market fell to pieces when the big whales who owned the bank and the domestic whales under the name of foreign funds, saw the open position of the speculators and how many days they had, and dived into the game.
While the only winners were the banks and large funds, a couple of registered speculators of the market, four big brokerage houses and small investors, who were involved in big business, went hunting while they were hunting.
Following the reaction from the stands, the CMB announced that it had started an investigation on those who made market-distorting transactions, and then held an emergency meeting the previous day with the intermediary institutions at risk.
The last step of the SPK brought to mind the proverb “after Basra was devastated”. Here, too, the CMB’s opening an investigation and taking short selling measures after the stock market was devastated were considered as late moves. However, since the Futures Market (VIOP) is new in Turkey, the CMB and brokerage houses could impose a limitation on leveraged transactions with such high risk.
BANKS INCREASED GUARANTEE TAKASBANK WATCHED
Let’s open the curtain on how the event, which started with the game of one or two speculators, whose names are known in the banking stocks that caused the collapse in Borsa Istanbul, developed step by step.
Speculators named MA, CT and BSK, whose names the market has known for years, and the investors they use, carried out the first operation at the Turkish Industrial Development Bank (TSKB) and Şekerbank. Şekerbank had 960 million shares circulating in the market. The total of the shares, each of which was one lira, was 960 million. In any case, Şekerbank, with a population of 300 million in the spot market, was viewed as not in good condition. MA and CT, which are also partners in İttifak Holding, bought the 300 million lot from the spot, and also bought the same shares from the VIOP market. Thus, it brought the price up five times. As a result, when he bought 500 million goods, his income was 2.5 billion TL.
After Şekerbank, they used the same method in TSKB shares, İş GSY and Halkbank.
Şekerbank sold the supplementary fund when the share price increased from 1 lira to 2 lira. İşbank funds also went on sale. As the prices went up, the small investor and the banks and their funds, who went on sale, actually made good money.
It was already known that bank share prices remained very low in dollar terms. When the second quarter balance sheet profits were high, the private banks had already entered an upward trend. It was only public banks that could not keep up with this rising trend. The Halkbank case was still not priced in, as they faced public losses and pressure to provide cheap loans to the market.
LAWYERS ARE SELLING EXHIBITION
It is said that millions of shares exploded in the hands of speculators and went bankrupt. However, brokerage firms working with these names also faced serious financial risks. It is also an unprecedented situation that one of these brokerage houses, which take great risks by not raising collateral in the futures market, disclosed the name of its customer. The brokerage house has to keep personal data. If there is an element of crime, it notifies the CMB or asks the customer to close the account. Even the foundation investment pulled the collateral rate to 90 percent before anyone else. The bank said to its futures investor, “You can buy a 100 thousand lira futures option worth one million, or you can buy 1 million lira on the spot,” almost zeroing the leverage. Because if someone went bankrupt, the bosses of the bank would hold him accountable. But some brokerage houses did not take precautions against these risks. It is also said that these brokerage house managers will not be able to stay in their posts for a long time.
900 million, 1 billion lira deficits are mentioned in the market. This rate is a big risk for the market. Lawyers try to reduce the loss by selling the collateral in hand ex officio. When the money is not received by the brokerage houses, which tell the investor to “deposit your collateral”, they automatically sell the goods with the logic of “where I return from the loss is profit”. Buyers come to big banks at a loss, but the real problem is experienced in public banks where the buyer does not come. Small banks whose prices have gone from 1 lira to 5 lira or 8 lira do not find buyers.
THE EXCHANGE THAT BANKED DEMİRBANK ALSO SANCT.
Again, the bank’s statement before the closing of the session, which sells millions of goods to the market in one day, is considered as a market disruptive action.
Announcing that it will conduct an investigation on market-distorting transactions, it remains to be seen whether the CMB will also examine this big bank. The same bank had signed the transaction that caused the bankruptcy of Demirbank during the 2001 crisis.
As a result, the big whales saw the open position of these speculators in the futures market and cut the penalty.
SPECULATORS MADE ‘HARAKIRI’
Due to the fact that foreign funds had closed their desks in Turkey, their prices were moving slowly despite banks staying very cheap and posting high profits. It was predicted that there would be a rapid rise if foreign funds opened the Turkey desks, but still, such a price increase in a month was almost impossible. But three speculators and their sub-groups made “harakiri” out of greed for profit.
Bank intermediary institutions saw the high risk and increased their collateral in the futures market even before Takasbank increased their collateral. They brought a limit of 30 times or 20 times risk to the investor, not 100 times. In a sense, they said, “If you’re going to market futures options from me, you have to increase my collateral.”
CMB and Borsa Istanbul could also see excessive volatility on the boards of public banks and take steps to close gross swaps and overdrafts or increase collateral. At the very least, they could have gone the way of increasing collateral in the swap. But at the swelling point, they increased their swap rates.
The day Takasbank increased its clearing rates, the speculators, who realized that they could not carry their positions, sold some of their goods at the price. At that level, they were the only buyers.
Speculators, trading both in the spot market and futures, were left with millions of lots of goods in their hands, as they did not expect such a move. Also, the day before, Takasbank had increased its clearing rates. Therefore, they realized that they could not carry the positions, so they turned and sold some of them at that price. At that level, they were the only buyers.
However, when a big bank announced that it sold 8 million lots of the reserve fund before the closing of the session, a day after the swap rates were increased, the speculators and small investors who did not come out of banking stocks for excessive profit were unplugged.
Because the position they take is also seen by big players in exchange transactions. They blew the bubble by calculating how much risk they took in which bank, their total cost and how many days they could last.