Long described as the bridge between East and West, with strong bonds to the central Asian republics (the “Stans”), which share a common past, cultural and religious affinities, Turkey seems intent on reclaiming the regional leadership and the global ambitions its recent insularity has suppressed.
This rebirth is founded on the strength of its economy, favorable demographics through the emergence of an educated and growing middle-class with disposable income and -- until now -- a model willingness to fit religious sensitivities into the day to day. A much-lauded “can-do” local entrepreneurial approach and a complex mix of commerce and both light and heavy industries complete this idyllic picture of Turkey.
Longer-term trends are positive. Turkey has recently experienced Chinese-style growth rates -- 8.9 percent GDP growth rate for 2010, 8.5 percent for 2011 and an expected 6.7 percent average GDP growth over the 2011/17 period -- and is proving to be more stable than many of its neighbors, notably Greece, its historical foe. Even though 2012 growth is expected to be subdued at 2.5 percent, this will still rank as a strong performance for an economy so much turned towards Europe; and let’s not forget that Turkey shares borders with Syria, Iran and Iraq.
Turkey is a prominent member of the HSBC-designated CIVETS group of economies, with strong growth potential, of Goldman Sachs’ Next-11 pick of future economic powerhouses and of BBVA’s EAGLEs, a set of emerging and growth-leading economies poised for growth. The updated BRICSAT concept, adding South Africa and Turkey to the original BRIC quartet of “emerged” global leaders, as launched by Goldman Sachs more than a decade ago, is further testimony of the strength of Turkey’s claims to a more prominent role in the world.
To support its ambitions and anchor that economic strength, the Turkish government appears determined to push for İstanbul to emerge as a regional financial center, at a time when both Moscow and Warsaw are also pushing for that same status, challenging their suffering Western counterparts.
The İstanbul Stock Exchange (İMKB) is poised to act as a catalyst for further growth. It’s bringing alternative financing facilities to new companies emerging from a burgeoning Internet scene, easing generational changes at the helm of older companies, facilitating the divestment of some of the more “exotic” adventures of the large family-based conglomerates and giving Turkish firms capital-raising options to address new challenges and opportunities, whether local, regional or global. The İMKB has already changed enormously but is continuing to evolve, with a renewed push to adopt new technologies, address regulatory reform and changes in global market structure.
The strength of, and challenge to, the Turkish stock market lies not only in its ability to meet these changes, but also in helping realize the country’s ambitions to become one of the pivots of its new regional zone of influence. By promoting and supporting linkages between regional economies through changes in the structure of capital markets, it will crystallize long-established trading routes that have criss-crossed this part of the world for centuries.
Philippe Carré is the global head of connectivity, SunGard Capital Markets.