Turkey is the land where the European and Asian continents meet. I asked Carlos von Hardenberg, who is based in Istanbul and oversees our frontier market strategies, to share his views from the center of Eurasia.
From Carlos von Hardenberg
Turkey is a dynamic country with over 73 million inhabitants, of which 75% live in cities with a median average age of 29 years.Turkey has developed into a popular destination for investments not only because of its competitive export sector, particularly in automobiles and consumer goods, but also because of its large domestic consumer market. Now Asian, European and American consumer-oriented companies are moving into Turkey to capture this large and growing consumer market.
I recently spoke at the Foreign Correspondents’ Club of Japan in Tokyo, where we covered a number of interesting topics. Following that event, you may have recently read headlines where the media has quoted me as predicting a second financial crisis. In this post, I’d like to give a little more context to that comment and also cover something I am particularly worried about: the problem of derivatives.
Market volatility is a reality of today and goes in two directions, up and down. One of the reasons we have (and are likely to continue to see) this level of volatility is because of the occasional misuse of derivatives. Of course, not all derivatives are bad. If understood and used appropriately they can be used by funds as tools to hedge or mitigate risk. For example, currency forwards or interest rate swaps are typically used to hedge out a fund’s risk related to a specific currency or interest rate exposure.