AGP Executive Report

Banking Shake-up: Türkiye Wealth Fund has agreed to acquire Ziraat Katılım and Halk Katılım, the first step toward merging three state-owned Islamic banks. Participation banking assets reached TRY5.35 trillion in August. Market Confidence: A probe found 214 people and firms made about $3.8 billion from troubled funds, while foreign investors sold $1.8 billion in Turkish bonds. Trade Links: Türkiye opened the EU-backed 153-kilometre Çerkezköy–Kapıkule rail section, strengthening freight links to Europe and the Middle Corridor. Economic Pulse: Industrial production fell 1.9% year-on-year in August, while agricultural exports hit a record for January–September. Global Business: Turkish contractors have undertaken $570 billion in overseas projects. Turkish Airlines carried 73 million passengers in the first nine months and plans to increase Lagos flights to 10 per week in December.

Fund Scandal: Authorities say 214 people and firms made about $3.8 billion from troubled Turkish investment funds. Repayments are beginning as lawmakers prepare rules for fund liquidations; foreign investors have sold $1.8 billion in Turkish bonds amid the turmoil. Industry and Trade: Türkiye’s industrial output fell 1.9% year-on-year in August, while agricultural exports hit a record for January–September. Infrastructure: President Erdoğan inaugurated a new rail link toward Bulgaria, extending high-speed service to the EU border. Overseas Business: Turkish contractors have undertaken $570 billion in projects abroad, and officials are urging European firms to deepen partnerships with them.

Market Confidence: Türkiye’s investment-fund scandal widened, with investigators identifying 214 investors and firms that allegedly made about $3.8 billion. A bill would allow eligible investors advances of up to 1 million lira, funded from fund assets and recovered losses—not the Treasury. Foreign investors also sold $1.8 billion in Turkish bonds amid the turmoil. Economic Signals: Industrial production fell 1.9% year-on-year in August, while agricultural exports hit a record for January–September. Trade and Transport: Erdoğan opened a new high-speed rail section to Bulgaria, cutting the Istanbul–Kapıkule journey from 4.5 hours to 1.5 and quadrupling capacity. Turkish Airlines carried 73 million passengers in the first nine months of the year.

Sanctions: The US targeted Türkiye-based Noorzad Petrokimya and its chief executive, alleging the company bought $3.8 million in Iranian-origin petrochemical products. Investor Protection: Türkiye is preparing rules for investment-fund liquidations after market turmoil; payments to investors in 17 funds are set to begin, while the government has ruled out using Treasury funds to cover losses. Defense Industry: ASELSAN’s latest air-defense contracts, including a €2.46 billion deal, push its announced contract total above $6 billion in two weeks. Trade and Exports: Türkiye’s export climate improved in September to its best level in 52 months, while merchandise exports hit a September record of $26 billion. Energy Links: Ankara could benefit from a new oil agreement with Baghdad as Iraq looks to increase crude exports through Türkiye.

Investor Protection: Türkiye’s ruling party has drafted rules for liquidating troubled investment funds, aiming to protect nearly 460,000 investors through asset reviews and interim payments. Exports and Industry: The country’s export climate improved to its strongest level in 52 months in September, while the industry minister said Türkiye has doubled its share of global manufacturing value added in two decades. Aviation: Istanbul Airport overtook London Heathrow as the world’s most connected airport, with direct links to about 350 destinations. Defense and Technology: ASELSAN signed a €2.46 billion air-defense contract, and Türkiye’s Türksat agreed with China Satcom to develop and commercialize space technologies.

Public Procurement: Turkish police detained 17 people in an Istanbul bribery and tender-rigging probe, renewing scrutiny of municipal contracting. Fund Turmoil: Payments to investors in 17 troubled funds are set to begin, while the Treasury ruled out covering liquidation losses; withdrawals have largely shifted to bank deposits. Defense Industry: ASELSAN signed €2.46 billion in air-defense contracts, taking its announced deals above $6 billion in two weeks. Trade: Türkiye’s exports hit a September record of $26 billion, including nearly $4 billion in auto exports; FTSE Russell kept the country’s Advanced Emerging Market status. Canada Ties: Prime Minister Mark Carney is due to make the first bilateral visit to Türkiye by a Canadian leader, with trade, investment, energy and defense on the agenda.

Defense Industry: ASELSAN signed €2.46 billion in air-defense contracts with Türkiye’s defense authority, adding to a surge in orders for the Turkish defense giant. Investment Funds: Payments start Oct. 8 for 43,643 investors in 17 funds under liquidation. Vice President Cevdet Yılmaz said repayments will use fund assets and recovered proceeds, not Treasury money; 131 funds are being wound down. Tourism Platforms: A bill advancing through parliament would require Booking.com, Expedia and Airbnb to obtain permits and appoint Turkish representatives, while capping commissions on domestic bookings at 17%. Energy: Türkiye’s Barbaros Hayreddin Paşa has resumed seismic surveys off the eastern Black Sea coast to assess oil and gas potential, with work planned through June 2027. Trade: Türkiye-Moldova trade rose 12.8% year on year to $638.7 million in the first half of 2026. Canada’s Prime Minister Mark Carney is also due to visit Türkiye to discuss trade, investment, energy and defense ties.

Canada-Türkiye Economic Push: Canadian PM Mark Carney will visit Ankara and Istanbul (Oct. 21-23) to deepen ties on energy, mining, climate, defence and security, and to meet Turkish business leaders as bilateral trade nears a 50% rise over five years. Black Sea Shipping Risk: Drone attacks off Bulgaria sank or damaged vessels in the NATO member’s economic zone, prompting EU warnings that civilian shipping is being targeted and raising insurance and trade concerns. Yemen & Mecca Defence Pact: Saudi-led coalition forces claim gains around Bab el-Mandeb while Saudi, Türkiye and Pakistan move to implement their mutual defence framework amid continued Houthi attacks. COP31 Climate Pressure: Pacific leaders in Fiji and Tuvalu urged wealthy countries to fund adaptation and keep the 1.5°C goal alive ahead of COP31 in Türkiye, as criticism grows over climate finance shortfalls. Turkey-Linked Regional Connectivity: Kazakhstan and Azerbaijan are set to launch a Kazakhstan-Azerbaijan fibre-optic line along the Aktau-Sumgayit route, boosting Middle Corridor digital capacity. Power Sector Lebanon Context: A Lebanon power ministry briefing highlights a long-running capacity deficit and misallocated depositor funds, with IFC-led efforts attracting only a handful of potential investors under strict guarantees.

Inflation Watch: Turkey’s annual inflation cooled to 29.7% in September, down from 31.5% in August, as weaker demand and a liquidity squeeze tied to fund redemptions eased price pressure—fueling expectations of a possible central bank rate cut. Markets & Funds: The central bank said money leaving liquidated investment funds largely shifted into bank deposits, while regulators continue probing suspected market manipulation; 85 suspects have been arrested so far. Mecca Defense Pact: Turkey and Pakistan agreed with Saudi Arabia to move toward rapid deployment of forces to the kingdom under the Mecca (Makkah) defense commitments amid Yemen escalation. Black Sea Shipping Risk: Drones attacked two merchant ships off Bulgaria; one sank and crew searches are ongoing, with Turkish crew among those rescued—raising fresh concerns for trade routes. Canada-Turkey Business Push: Canadian PM Mark Carney will visit Ankara and Istanbul (Oct. 21-23) to meet Erdoğan and Turkish business leaders, focusing on energy, aerospace, advanced tech, mining and defense. Sports & Tourism: IOC confirmed India and Qatar among seven bidders for the 2036 Olympics, with Turkey also in the mix; separately, the Turkish Grand Prix is set to return in 2027. Defense Industry: Aselsan secured major deals for hybrid air defense systems, underscoring continued momentum in Turkey’s defense exports.

Makkah Defence Pact: Saudi Arabia, Türkiye and Pakistan agreed to move immediately toward implementing their collective-defense commitments under the Mecca Defense Alliance, including rapid deployment of agreed forces to the Kingdom amid Houthi attacks; details on troop numbers and timing were not shared. Tourism Regulation: Türkiye is set to debate new rules for foreign booking platforms on Oct. 6, requiring permits, local representatives, license verification and a commission cap of 17% (excluding VAT), with Booking.com’s domestic reservations currently paused since a 2017 court ruling. Air Defence Deals: Aselsan signed €2.46bn contracts with Türkiye’s Defense Industries Secretariat for hybrid air defense systems, reinforcing the Steel Dome network as deliveries schedules were not disclosed. Markets Watch: Gold slipped as a stronger dollar and higher U.S. Treasury yields pressured prices, while Türkiye’s early gram prices hovered around 6,520 lira. FX Push: Türkiye reported foreign trade transactions in Turkish lira reached 1.2tn lira in Jan–Sep 2026, up 13% year-on-year, with exports in lira rising faster than imports. Space Cooperation: Erdoğan said Türkiye will build a spaceport in Somalia as part of its National Space Programme, announced at the Antalya astronautics congress. Black Sea Shipping Risk: A Turkish-linked cargo ship reportedly sank off Romania after a drone strike, killing two crew members and triggering renewed scrutiny of maritime security.

Turkey-FTA Push: Bangladesh’s industries minister Khandakar Abdul Muktadir met Türkiye’s ambassador to press forward free-trade talks, expand trade and investment, and explore cooperation on hazardous industrial waste management. Eastern Med Cable Clash: Greece says it will not seek Turkish permission for seabed surveys tied to the Great Sea Interconnector, while Ankara warns it will block activity in waters it claims as its continental shelf. Turkish Capital Markets Shock: Reports say an economist alleged investors withdrew about 227bn lira ahead of Türkiye’s fund crackdown, as the SPK liquidates 131 funds affecting 455,758 investors; meanwhile the AKP reportedly dropped plans for a parliamentary inquiry. Banking Watch: Halkbank is still pursuing a public share offering despite the fund crisis, citing strong investor interest abroad. Tech & Telecom: Turkcell CEO Dr. Ali Taha Koc was elected to the GSMA Board for 2027–2028, as Türkiye also blocks X access for multiple accounts amid a broader censorship wave. Defense & Industry: Aselsan signed $2.75bn deals for hybrid air defense systems, reinforcing momentum in Türkiye’s defense exports. Space Business: The 77th International Astronautical Congress opened in Antalya, with Erdogan urging space cooperation and SpaceX executives meeting him at the event.

Turkey’s Fund Scandal: Turkey’s biggest financial scandal in a decade has widened into President Erdoğan’s political circle, with investigations into alleged market manipulation, fraud and money laundering tied to 131 investment funds and about €17bn in assets, leaving hundreds of thousands of savers trapped; prosecutors are also seeking to probe the former SPK head over alleged oversight failures. Capital Markets & Investor Relief: Authorities are moving to speed up interim payouts for investors in troubled funds under liquidation, as courts order more suspects jailed pending trial. Security Crackdown: Turkish forces arrested 51 suspected ISIS members across 16 provinces, targeting membership, financing networks and social media propaganda. Space & Tech Diplomacy: Antalya hosted the Antalya Declaration, backed by 21 countries, calling for peaceful, sustainable space use ahead of the International Astronautical Congress, while the International Space University launched a Global Campus Initiative. Energy & Trade: Türkiye and Iraq plan to activate joint energy working groups, including extending the Kirkuk–Ceyhan pipeline toward Basra and boosting capacity. Regional Climate Push: Pre-COP31 climate talks opened in Fiji as Pacific leaders press for 1.5°C, climate finance and stronger ocean protections ahead of COP31 in Turkey. Gaza Humanitarian Fallout: Israel killed a Turkish NGO-linked figure in Gaza, escalating scrutiny of aid groups amid ongoing strikes. Startup Bridge to the Gulf: Rasmal Ventures partnered with Türkiye’s Bilişim Vadisi to build a startup and investor bridge between the Gulf and Türkiye.

Markets & Finance: President Erdoğan told investors Türkiye can absorb the investment-fund turmoil, pointing to a roadmap after SPK ordered liquidation of 131 funds affecting 455,000 investors, with interim payments approved up to 1 million Turkish liras per eligible investor. Corporate & Trade: Türkiye’s auto exports neared $4bn in September (about $3.94bn), helping push total exports to a September record $26bn; for Jan–Sep, exports hit $211bn. Energy & Shipping: Iraq’s state tanker firm shipped 2m barrels of crude beyond the Strait of Hormuz for the first time in decades, aiming to improve pricing and reduce discounts as war disrupts Hormuz flows. Defense & Industry: Erdoğan said Türkiye is “revolutionizing” defence and aviation at Teknofest, citing rising exports and domestic production; Aselsan is also seeking Japan partnerships in air defence and underwater drones. Regional Security: Fidan will attend in Riyadh a committee meeting under the Mecca Joint Defence Agreement with Saudi Arabia and Pakistan, with Houthi attacks on the agenda. Business Events: Istanbul hosts the ACE BPSC 2026 summit (Oct 7-9) bringing together AmCham leaders and CEOs to shape trade priorities. Geopolitics Watch: FATF put Turkey on notice over Hamas terror financing, money laundering and Iran sanctions.

Investment Funds Crisis: Erdoğan says the government will resolve Turkey’s investment fund meltdown “swiftly and fairly,” protect investors, and pursue those who profited illicitly, with the Fund Coordination Board overseeing the payment process. Energy & Trade: Iraq and Türkiye advanced a draft deal to boost Iraqi oil exports via the Ceyhan port, setting up joint technical committees and expanding Turkish firms’ role in oil and gas projects. Banking & Regional Expansion: Commercial Bank and Alternatif Bank backed a DEIK-supported event to help Turkish companies finance and grow across the Gulf, focusing on cross-border banking and trade finance. Defense Industry: Aselsan is looking to deepen ties with Japan on underwater drones and air defense as regional threats intensify. Market Signals: Oil prices started to fall after G7 agreed to release 100mn barrels of oil and diesel from reserves, a move aimed at easing fuel-price pressure. Corporate/Legal Risk: FATF has put Turkey on notice over Hamas terror financing, money laundering and Iran sanctions, raising compliance pressure for financial players. Security: Türkiye detained suspects in ISIS operations across multiple provinces, while separate reports highlight sanctions-evasion networks tied to shell firms and crypto.

Turkey’s Fund Crisis Response: President Erdoğan said the government is working to resolve the investment fund turmoil “swiftly and fairly,” with the DDK, Justice Ministry and Treasury overseeing steps to protect investors and pursue those who gained illicitly. Capital Markets Update: Turkey’s SPK approved interim payments for investors in the fund crisis, with advances up to 1 million lira per eligible investor in affected funds, while final recoveries remain unclear. Detentions in Fund/Market Probes: A Turkish court jailed 20 more suspects in the fund investigation, bringing the number jailed across related probes to 85. Trade Performance: Turkey’s exports hit a September record of $26bn, up 15.4% year-on-year, while imports rose 5.9% and the monthly trade deficit narrowed. Security & Business Environment: Turkey detained 51 people in ISIS operations across 16 provinces, while separate municipal bribery raids targeted Istanbul’s acting mayor and others. Regional Business Link: A DEIK-supported event in the Gulf focused on financing, trade finance and cross-border banking opportunities for Turkish firms.

Energy Diplomacy: Iraq and Türkiye opened talks in Ankara on a framework deal to expand oil, gas and energy cooperation, including a roadmap to strengthen infrastructure, petrochemicals and energy trade, building on the Kirkuk-Ceyhan pipeline deal targeting 750,000 bpd. Sanctions & Aviation: The US granted exemptions for some Iranian airlines to fly to Iraq’s holy city of Najaf (40 daily flights, excluding Mahan Air), easing pilgrim and medical travel after Najaf suspended Iranian services. Regional Security: Pakistan, Saudi Arabia and Türkiye agreed in principle to convene an emergency Strategic Political and Defence Committee meeting in Riyadh under the Makkah Joint Defence Agreement as Houthi attacks intensify. Mining Safety: Turkish rescuers recovered three miners’ bodies after a collapse in Manisa’s Soma, raising deaths to five, while another miner died in a separate unlicensed mine incident on the Black Sea coast; nine executives were detained over alleged negligence. Corporate/Markets: S&P said Türkiye’s fund turmoil hasn’t hit the country’s credit rating, while Türkiye’s capital markets regulator moved to speed interim payments to investors in troubled funds.