Turkey & Eurasia Business — 2026-10-17
Turkish markets faced significant volatility this week, with the BIST 100 index sliding 14.9% over the last month amid regulatory crackdowns on investment funds. Meanwhile, the textile and apparel sector is showing early signs of recovery in 2026 after years of decline, and the gap in AI adoption between large and small firms has widened significantly.
Turkey & Eurasia Business — 2026-10-17
Key Highlights
Market Volatility and Regulatory Crackdowns The BIST 100 index recorded a 14.9% decline over the past month, coinciding with a new law aimed at winding up 131 investment funds. This regulatory move follows allegations of Ponzi-like schemes that reportedly wiped $30 billion from the stock market in just two days. The Central Bank of Turkey has maintained a policy rate of 37% as it navigates these financial instabilities.
Textile Sector Recovery According to the Trade Minister, Türkiye’s textile and apparel industries are beginning to recover in 2026. This marks a positive turn after export and employment declines were recorded in 2023, 2024, and 2025.
Widening AI Adoption Gap The disparity in artificial intelligence adoption between Türkiye's largest and smallest enterprises has tripled to 24 points since 2021. This data highlights a growing digital divide as larger firms accelerate their integration of AI technologies compared to smaller competitors.
Startup Ecosystem Funding Trends As of September 2026, Turkish startups have raised $160 million across 29 equity funding rounds. This represents a slowdown compared to the same period in 2025, which saw $434 million raised across 45 rounds. Despite the drop in volume, fintech and gaming sectors continue to dominate, accounting for a significant share of total capital deployed.
Analysis
The most critical business development this week is the dual pressure on Turkish financial markets: regulatory enforcement and market sentiment. The liquidation of 131 investment funds signals a rigorous cleanup by financial regulators following the $30 billion loss event. For investors, this suggests a short-term increase in risk perception, as evidenced by the BIST 100's 14.9% monthly decline. However, the resilience of the textile sector and the continued, albeit slower, flow of venture capital into startups indicate that the real economy and innovation sectors may be decoupling from the financial volatility. The widening AI gap also poses a long-term structural risk to competitiveness if smaller firms cannot catch up.
What to Watch
Regulatory Impact on Market Stability Investors should monitor how the liquidation of the 131 investment funds progresses. The effectiveness of this cleanup will determine whether the BIST 100 can stabilize or if further volatility is to be expected. The policy rate of 37% remains a key factor in curbing inflation and stabilizing the lira.
Textile Sector Momentum The recovery in the textile and apparel industry is a positive indicator for export-led growth. Watch for further data on export volumes and employment figures in Q4 2026 to confirm if this recovery is sustainable.
Startup Funding Consolidation With funding rounds down from 45 to 29 year-over-year, the startup ecosystem is likely consolidating. Investors may be backing fewer, larger deals, particularly in fintech and gaming. Keep an eye on whether this trend leads to higher valuations for surviving startups or a broader contraction in early-stage funding.
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