Turkey: the Istanbuls are out in force
Turkish economic growth: Turkey the istanbuls are out in force - at Moneyweek.co.uk - the best of the week's international financial media.
Turkey, "long a swamp of corrupt politics and rotten economics", has produced an impressive turnaround, says Lisa Hess in Forbes. Since being elected in November 2002, prime minister Recep Erdogan has presided over the return of political stability and a dramatically improving economy. GDP growth is running at 4-5%, inflation has dropped to a 34-year low of 14.3%, interest rates have nearly halved to 26%, and the Turkish lira has recovered sharply from record lows against the dollar. Economic reforms and the absence of restrictions on foreign investors have also underpinned soaring foreign investment in the benchmark Istanbul Stock Exchange National 100 index, which has advanced by more than 70% since Erdogan's election to a record high above 20,000.
Many fund managers are also betting that Turkey's efforts to secure the reunification of Cyprus before its impending entry into the EU will prompt the latter to set a date for negotiations over Turkey's accession as early as the end of 2004, says Vito Racinelli in Barron's. A date for talks would prompt a "convergence rally" as further reforms lower interest rates, inflation and government deficits to"the EU's market-appealing averages".
According to Riad Younes of the Bank Julius Baer International Equity Fund, the growing likelihood of Turkey joining the EU, along with the solid economic outlook and cheap valuations - the average 2004 p/e of stocks is 13 compared to 15-16 for other emerging markets - implies upside of at least 200% over the next five years. Especially promising stocks include Isbank, the sector's best bet in a strengthening economy, says Hess. Consider also Koc Holdings, a conglomerate with interests spanning cars, food processing and securities brokerage. It's the "best way" to play rising Turkish living standards.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
How to invest in nuclear power
We need nuclear power to go green, says Dominic Frisby. But there is a better option than huge power stations
By Dominic Frisby Published
-
Chase slashes its easy-access savings rate – is it time to switch?
The Chase easy-access savings account has proved popular with savers thanks to its competitive rate and bonus deals. But, as the rate has dropped, has it lost its charm?
By Katie Williams Published