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Turkey is another large emerging market that is often in the shadows of the BRICs. The country is growing fast with real GDP growth of 8.9% percent for 2010 and expected growth rate of 5.7% per year up to 2015. It has a large, young population (mean age of 28) that is more educated and connected to modern technology than the rest of the Muslim world. Turkey has a sizable industrial base producing automobiles, high technology products, consumer electronics and textiles. Turkey is also a popular tourist destination, one of the world's largest shipbuilding nations and host to many of the vital pipelines that connect Middle Eastern oil to Europe.

The downside about investing in Turkey is geopolitical risk and the reemergence of political Islam in the country. The AKP party maintains control by winning the recent general elections. They have a platform that mixes a pro-free market outlook with conservative Islamism. The growing strength of Islamism in Turkey may remove its competitive advantage of having a secular government since the days of Attaturk in the 1920's. An example of this growing trend is the country's recent removal of support towards Israel. The conflict of the Kurd's, who live in the mountainous southeastern portion of Turkey, is another significant political risk.

Unfortunately there is lack of selection for American investors. Most Turkish companies trade on relatively illiquid pink sheets or the Istanbul exchange. However, there is one stock and one ETF that are available to investors directly on American exchanges.

Turkcell (TKC)- Turkcell is the leading Turkish cell phone company. Their phone network covers 97% of the country. With a large population of 74 million people, there is room for growth as cell phone ownership and minute use is significantly lower. The company pays a 4.6% dividend yield for income investors. However, earnings growth is expected to halt at just 2% annually over the next five years.

iShares Turkey Index (TUR) - This is leading ETF for the Turkish economy. It is significantly overweighted with financials (47% of assets, 39% in commercial banks alone) and 58% of assets are in it top 10 holdings. The fund also contains significant portions of industrials, consumer goods and telecom. Overall, this ETF is the best way to diversify in Turkey for American investors. It's approaching its technical resistance at $55 per share and if the stock fails to break down below, it may be a good time to buy for income oriented emerging markets investors.

If you want to invest in the Middle East, then Turkey is your best bet. The country is the most westernized, industrialized economically developed outside of oil of any Muslim nation. If you do not want to deal with the pink sheets or international exchanges, the TUR and TKC are the way to go.

Source: Trading Turkey Part I: Stocks Available off the Pink Sheets