Investing in Turkey

Investing in emerging market economies always entails extraordinary risks. Policy makers are usually more populist than their western counterparts; you can find yourself having to deal with unexpected/irrational regulations or taxes. Markets are inefficient, excessively volatile and it may take a lot of time to correct mispricings. This is why emerging market economies provide investors with the biggest of payoffs.

Turkey has experienced several coalition governments and terrible governance in the nineties. The consequence of this was reflected on the country’s economic performance. We had 3 financial crises between 1994 and 2001. Since 2002, however, Turkish economy grew at a cumulative rate of more than 30%; Istanbul Stock Exchange more than quadrupled in value and inflation rate came down to below 8% from 70% in 2001. For a detailed discussion of the economic path of Turkey in the past three years I suggest you to read Serhan Cevik’s posts on Morgan Stanley website.

Until now, I have been commenting on investment opportunities in Turkey in Turkish. My portfolio is given on the right column and it shows the number of shares I have and the price I paid. I started trading (bkz. definition of insider trading) Turkish equities in October 2005, so it’s been about 4 months. Since then my initial investment went up by about 45% in value (in Turkish liras) and US dollar depreciated by about 2%. So, my overall return is about 47%. I am not really happy about this because I did not have enough time to shift my funds to Turkey before the jump in stock prices; recently I bought some stocks at the peak of the market and I still have some funds on the sideline (waiting for a good opportunity).

From now on, I will post my opinions in English as well. I have to remind you that you have to use them at your own risk and don’t forget to read the “Terms of Use” of this website.

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