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Turkey is on the Menu
The boarding of a Turkish ship by Israeli commandos and the international brouhaha that it sparked has thrown a searing spotlight on that emerging nation. Several hedge fund friends and not a few readers of this newsletter in Istanbul have urged me to explore this intriguing nation further. So I thought I would use this otherwise glacial news day to do exactly that.
I first trod the magnificent hand woven carpets of the Aga Sophia in the late sixties while on my way to visit the rubble of Troy and what remained of the trenches at Gallipoli, a bloody WWI battlefield. Remember the cult film, Midnight Express? If it weren’t for the nonstop traffic jam of vintage fifties Chevy’s on the one main road along the Bosporus, I might as well have stepped into the Arabian Nights. They were still using the sewer system built by the Romans.
Four decades later, and I find Turkey among a handful of emerging nations on the cusp of joining the economic big league. Q1 GDP grew at a blazing 11.4% annualized rate, second only to China, exports are on a tear, and the cost of credit default swaps for its debt is plunging. Prime Minister Erdogan, whose AKP party took control in 2002, implemented a series of painful economic reform measures and banking controls which have proven hugely successful. Since the beginning of this year, Turkey’s ETF (TUR) has outperformed BRIC poster boy China’s ETF (FXI) by a whopping 11.8%.
Foreign multinationals like general Electric, Ford, and Vodafone, have poured into the country, attracted by a decent low waged work force and a rapidly rising middle class. The Turkish Lira has long been a hedge fund favorite, attracted by high interest rates. With 72 million, the country ranks 18th in terms of population and 17th in terms of GDP, some $615 billion. It has a near perfect population pyramid; with young consumers greatly outnumbering expensive retirees (click here for more depth in my “Special Demographic Issue” at http://www.madhedgefundtrader.com/november_6__2009.html ).
Still, Turkey is not without its problems. It does battle with Kurdish separatists in the east, and has suffered its share of horrific terrorist attacks. Inflation at 8% is a worry. The play here long has been to buy ahead of membership in the European Community, which it has been denied for four decades. Suddenly, that outsider status has morphed from a problem to an advantage.
Growing economic power brings political influence with it. The last year has seen Turkey broker settlements in the Balkans and facilitate the Iranian uranium swap with Russia. Some analysts claim this new flexing of diplomatic muscle has a pronounced Islamic, anti American bent. Remember, Turkey refused transit rights to US forces during the invasion of Iraq.
The way to play here is with an ETF heavily weighted in banks and telecommunications companies, classic emerging market growth industries (TUR). You also always want to own the local cell phone company in countries like this, which in Turkey is Turkcell (TKC). Turkey is not a riskless trade, but is well worth keeping on your radar.
To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.
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It sounds like someone threw a dart at the map with the intention of writing a quick spin piece on whatever country got hit.
Next up: Panama!
So we should tell "mom" that "we put her money in Turkey." Is this designed to confuse said "mom" such that she thinks "oh, turkey's are such nice birds"? Now if I were an industrial company and having seen first hand the work ethic of Bosnians I would look at what is called "the former Yugoslavia." Insofar as "selling Fords in Turkey" I think I'll pass on that one. Besides, I'm a sucker for the outcast.
"Prime Minister Erdogan, whose AKP party took control in 2002, implemented a series of painful economic reform measures and banking controls which have proven hugely successful."
Painful for who?? Successful for who??
Turkey is the most corrupt country on earth--talk to anyone who was born and raised in Turkey. It's a gigantic Ponzi scheme, designed to fool...well, designed to fool people like madhedgefundtrader.
Hello madhedgefundtrader. You're a fool.
Israel country and products should be boycotted and refused the privilege to attend the Olympics for their constant hostile actions around the world... including the murdering of a leader and using fake passports from countries who specifically asked Mossad not to... and illegally boarding ships in international waters... and walling in land like was done during WWII in Warsaw... and Israel is the most frequent country that breaks UN mandates...
For the person who junked me, see these two new articles (plenty of others every week):
UN faults Israel's human rights
www.straitstimes.com/BreakingNews/World/Story/STIStory_559924.html?
Ethnic cleansing in the Israeli Negev
www.guardian.co.uk/commentisfree/2010/jul/28/ethnic-cleansing-israeli-negev
Turkey, Singapore, Denmark, North Korea, Japan.... all classic social engineering targets.
So obvious to eyes that see. Secularism... as a state policy too. What a strange joke on it's people.
ORI
http://aadivaahan.wordpress.com
Turkey should not be considered for entry into the EU until such time as they return Constantine's basilica of St Sophia to the rightful owners and change the name of Istanbul back to it's pre-WWI name, Constantinople.
Anything less shows clear disrespect by Turkey of EU cultural norms. Israel would not be able to join the EU unless the Gaza question was addressed. Turkey should not be treated differently.
Turkey's sole problem is muslims. So long as they can hold them at bay, they recall were the Ottoman Empire, Constantinople was THE center of the earth for hundreds of years, the seat of 3 major empires, etc. They're not arabs.
But there's the constant friction that muslims introduce trying to drag things down to Arabia's level. For a case study in the comparative effects of worshipping Allah versus cows, take a look at the respective HDIs of Pakistan and India or their respective prestige on the world's stage.
Ataturk made Turkey a largely secular nation.
Unfortunately, not any longer. And given the historic antipathy between science and moslem culture, their longer term prospects, and the enormous cultural costs of being part of jihadi culture, the longer term looks somewhat dicey at best.
I was waiting for a stupid religious comment like that. Grow up and stop spreading this nonsense about Muslims, the majority of whom are peaceful people. Every religion has its bad apples. Stop generalizing and leave religion out of here.
+ 1 .. Thanks Leo..
Hello Leo. Why are you still alive?
"Suddenly, being shut out of the EC doesn’t look half bad."
No kidding, all they have to do is look at their EU neighbor to breath a collective sigh of relief. Interestingly, either because of careful planning or by total fluke, Turkey's pensions led the world in 2008. Of course, they didn't do as well in 2009, but still managed to avoid the catastrophe of 2008. Good for them.