Turkish Stocks Gain on Electoral Results

With great risk comes great reward, and in an internationally diversified portfolio, national news turns quickly into market results. This weekend, while Wall Street slumbered, Turkey reaffirmed its commitment to progress and triggered a stock market cheer.

Will she or won't she? Turkey's pending accession to the European Union has been a topic of fierce debate among existing members of the continental body. Its conflict with Greece over control of the split Mediterranean island of Cyprus is one bone of contention, and then there is the touchy matter of Turkey's regional and religious history. Turkey is a secular Islamic state, generally thought of as part of the Middle East and bearing the Crescent and Star on its red flag.

A land of paradoxes, the separation of church and state is taken by many as an article of faith in the former capital of the Byzantine and Ottoman Empires. But recent political elections have been a jostle between vehemently secularist and moderate religious parties.

Unlike the "Islamist" connotations of parties like the Taliban or Hamas, Turkey's ruling Justice and Development Party has promoted pluralism of traditions, economic growth, and the acceptance of Turkey into the EU.

Based on the Istanbul stock market's reaction to Sunday's re-election of that party (known by its Turkish acronym AKP) and its prime minister, Recep Tayyip Erdogan, the country's economy is expected to benefit from continued moderate rule and parliamentary consensus-building on economic reforms encouraged by the EU.

The Istanbul Stock Exchange benchmark index, the IMKB-100, jumped by nearly 4% on Monday, reaching a record high during the session. Foreign direct investment (FDI) has jumped by leaps and bounds since the AKP came to power in 2002, and public debt plunged.

Our Orbus Investor pure play on Turkey, mobile phone network operator Turkcell, jumped in Istanbul and New York too, where it trades as NYSE:TKC. When the NYSE opened Monday, American Depositary Receipts of Turkcell jumped by over 8%, before Wall Street's overall decline Tuesday. The company's stock is up well over 30% since my recommendation in October of last year, with a significant upswing evident since this spring.

As it continually sets new highs, Turkcell is proving itself to be a perfect example of how to play a country's political progress in the international market.

Regards,

Sam Hopkins