Gary Poster, with essential assists from Galyn Norwood, Phiroon Phihakendr, Jose Quijada, Pavandeep Kalra. Coping with the volatility of emerging markets requires a strong stomach, but right now it's definitely worth it. During the past five months, some of the best performance has come from funds focusing on European developing countries and surrounding regions. The market's moves can be traced to April '99, when the newly elected coalition government addressed some of Turkey's most important structural issues, including social security reform, banking reform, international arbitration, and privatization. For example, the recent passage of international arbitration laws is expected to spur investment from major multinational corporations, which now can air disputes in an international forum rather than in the Turkish courts.
Foreign investors stand to get a piece of that privatization action.
Another factor inspiring Turkish stocks is the recent nomination of Turkey for possible inclusion in the European Union. While the country would first have to meet certain inflation and human-rights criteria, membership would effectively signal to the world that Turkey's economy has come of age. Recent events suggest the economic situation has stabilized, and there are further encouraging signs on the political front. The outlook has brightened further because of Boris Yeltsin's New Year's Eve resignation. Yeltsin's successor, Vladimir Putin, is largely an enigma to Western analysts, but his strong presence already contrasts sharply with Yeltsin's sickly appearance.