Investors in the Turkish Investment Fund (TKF) have done rather well over the last two years. Look at this chart (click to enlarge) comparing TKF (green) to the S&P 500 (orange):
Now, Morgan Stanley economist Serhan Cevik predicts that Turkey will continue to outperform the global economy in 2007:
After decades of instability, Turkey is at last breaking the curse of boom-bust cycles. Our projections for Turkey have been significantly more optimistic than market expectations in the last three years, and our latest assessment is apparently no exception. Despite the expected global slowdown in 2007, the Turkish economy, in our view, will continue to outperform the rest of the world, as the growth rate of real gross domestic product accelerates from 6.2% this year to 6.5% in 2006 and then to 6.8% in 2007. This is, to say the least, a bold forecast, since most economists, focusing on the ‘deterioration’ of Turkey’s current account balance, keep expecting a costly adjustment. Our out-of-consensus call on Turkey’s economic and financial markets has so far been correct, but could global imbalances bring an abrupt end to the ‘age of stability’ in Turkey? We believe that such a risk, while always present, is becoming increasingly unlikely.
(Full essay here.)
Does that make TKF an attractive investment for 2007? Your call, but note that the fund (a closed-end fund rather than an ETF) now trades at a 26% premium to net asset value.
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