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Beverly Chandler

Turkish fund firm predicts market to rise 25 per cent in 2016


Bruegger Invest, Managers of The Great Turk Fund, are forecasting 25 per cent growth in the MSCI Turkey Index through 2016. The MSCI Index, which is designed to measure the performance of large and mid-cap segments of the Turkish market, covers about 85 per cent of the country’s equity universe. The Index is up some 1.55 per cent in dollar terms in January, outperforming the overall MSCI Emerging Markets Index by 8.07 per cent.

Urs Bruegger, MD of Bruegger Invest and his research teams in Istanbul and London, report that the major drivers of Turkish growth will include the continuing development of, and government investment in, Turkey’s domestic defence industry buoyed by regional instability and by the country’s maintenance of the second largest army in NATO after the USA.

The firm also finds that there will be increasing commercial opportunities for Turkish companies, for example in the industrial and construction material sectors, in hotels, hospitals, ports, airports, shopping malls, transportation, pipeline and refinery sectors following the withdrawal of international trade sanctions on Iran. Other positive drivers include an anticipated agreement between Israel and Turkey regarding the distribution of Israeli natural gas via Turkey into a Europe that is keen to reduce its dependence on imports from Russia. The firm writes that this deal is likely to have a positive impact on the forthcoming Cypriot referendum on the potential reunification of the island since Cyprus could benefit significantly from the proposed route of the gas pipeline (rather than being bypassed).

The firm also finds that the Turkish army’s operations have significantly weakened the terrorist group PKK. Ocalan, the imprisoned leader of PKK, may ask the group to disarm and begin a new peace process in 2016, the firm writes. Such a development – although with a small probability – may be the strongest positive trigger for Turkish assets.

According to the OECD, Turkey is expected to continue to be one of the fastest growing countries within the OECD membership through 2016. 

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