 |
|
 |
|
 |
|
 |
|||||||||||||||||||||
|
Istanbul, Turkey
"Well, now I am in three businesses," he says. "First, scuba-diving equipment. Second, baby carriages. Third, condoms." He laughs. "If you don't use my condoms, I sell you a baby carriage." Welcome to Turkey, with the most advanced economy in the Muslim world and a population that's larger than every European country but Germany — which is one reason the European Union is so reluctant to accept the Turks as members. Another reason is that Turkey is, overall, a poor country, with a GDP about one-fifth the European average and a currency that can only be described as humorous. One dollar converts to about 1,386,500 Turkish lira. Turkey, which rejected U.S. requests to help in the war against Saddam Hussein, now has a government with a religious bent, but so far economic policies have been sound, and the secular state that Kemal Ataturk, one of the great heroes of the 20th century, created 80 years ago survives and even thrives. The wild exchange rate reflects inflation, which has been rampant. When I first visited Istanbul in 1998, it was 97 percent annually; now it's 25 percent, the highest among all countries tracked weekly by The Economist. But things are looking up. The Turkish lira has been rising sharply against the U.S. currency; in April the exchange rate was 1.7 million lira to the dollar. Turkey announced earlier this week that industrial production was up 12 percent over last year and GDP is rising at an 8 percent rate — the fastest in the world. This is, as the World Bank puts it, "a dynamic, emerging market economy." Despite the risks presented by the new government and the turmoil in the Middle East (in fact, because of them), Turkey presents an intriguing and possibly profitable investment opportunity. If the United States and its allies are successful in building democracy and stability in Iraq, Turkey, on its northern border, will benefit more quickly than any other nation. A popular way for Americans to own Turkish stocks is through the closed-end Turkish Investment Fund (TKF), which you can trade as if you were trading shares of an individual company on the New York Stock Exchange. The fund's adviser is Morgan Stanley Investment Management, and its co-manager, Ahmad F. Zuaiter, says he is "very positive both short- and medium-term on the prospects for Turkey." He's optimistic, for example, about the nation's politics. He sees the Islamist-leaning Ak Party as a "real anchor for reform and fiscal restraint" and says it's being pushed toward economic liberalization by the goal of joining the EU. Also, he says, despite the country's lack of cooperation during the Iraq war, after a close vote in the parliament in March, "Turkey's strategic importance to the U.S. seems to have remained intact." That was my impression as well from visits to Istanbul and Ankara, but it's not the conventional wisdom — so perhaps this optimistic view is not built into stock prices. After all, the current price-to-earnings ratio of Turkish stocks is 10 — or about one-half the P/E of the average stock in the Dow Jones industrial average. Turkish stocks are a lot riskier, certainly, but, with robust GDP growth, earnings should be rising awfully quickly. The Turkish Investment Fund offers a wild ride. In 1997, it rose 36.7 percent; in 1998, it fell 39 percent; and in 1999, it rose 306 percent. Then, over the next three years, it got clobbered down a total of 70 percent. Overall, then, the fund was up 15 percent, beating the S&P by a bit. So far in 2003, Turkish Investment has returned an impressive 24 percent. One drawback to the fund is that its returns have roughly followed those of the U.S. markets, year by year, but with greater amplitude. In other words, U.S. and Turkish stocks both rose in 1999 and then fell in 2000, 2001, and 2002, and rose again in 2003. An investor would prefer, in seeking diversification, to find markets that rise when U.S. markets fall, and vice versa. But there are other reasons to buy Turkey. "Look at most sectors, now versus three years ago," says Zuaiter of Morgan Stanley, "and you will witness a significant change, whether it is the banking sector, telecoms, cement, power, construction." Zuaiter is fond of cement (his largest holding, at 6.5 percent of assets, is Akcansa Cimento), glass and construction. He also likes telecom companies, non-food retailers, media and banks — as well as sectors that will benefit from trade with the new Iraq. Already, goods such as washing machines, television sets, and food products are flowing across the borders, as well as cement for rebuilding — and Turkey is well-positioned to become a bridge for Iraqi oil when it starts to flow more copiously. Turkey is, emphatically, not for the fainthearted, but as a small holding in a diversified portfolio, it may make sense. It's a wager on the success of a vigorous Muslim democracy. It's also a bet on people who, in the words of Kemal Unakitan, the minister of finance, "are dynamic, extremely entrepreneurial and tremendously risk-taking such that would call them adventurous." Investors in Turkey have to be adventurous, too, but what's wrong with that? — James K. Glassman is a fellow at the American Enterprise Institute and host of TechCentralStation.com. This article originally appeared in the Washington Post. |
|
|
|
|||||||||||||||||
|
|
|||||||||||||||||||||
<% dim printurl
printurl = Request.ServerVariables("URL")%>
ere
I am at the hippest restaurant in Istanbul. It's a set of art deco white
dining tiers that spill down to the banks of the Bosphorus, where the
tankers race all night between the Black Sea, 18 miles to the north, and
the Sea of Marmara, just south. The place, called Mirrors, is so hot that
Volkswagen and other big corporations rent space on a giant video screen
inside and plaster their logos on the napkins. Being American, I am way
too early for the excitement, which starts at 11 p.m. and goes till dawn.
