Turkey at Heart of New ‘Not-Quite-BRIC’ Index

By Joe Parkinson

A few months back, economists were openly debating whether fast-growing Turkey should be elevated into the elite club of ‘BRIC’ economies — Brazil, Russia, India and China — that are slated to dominate global growth over the next decades.

Aside from the fact that it would have made the acronym less catchy (think BRICT or TRIBC) investor concerns over Turkey’s rapidly widening current account deficit and Middle East turmoil conspired to put that debate on ice. But Turkey is considered a key player in the second-tier of emerging economic powerhouses: referred to by the lesser known, and, alas, more forgettable acronym CIVETS.

Turkey, Columbia, Indonesia, Vietnam, South Africa and Egypt — all large, but not continental size economies with young populations — have been attracting waves of foreign investment. These economies are expanding robustly, are not overly reliant on natural resources and — with the exception of Egypt — possess relative political stability.

Conscious of the potential of these economies and undeterred by the clunky acronym, Standard & Poor’s on Tuesday launched the CIVETS 60 index — comprised of 10 stocks from each economy. Unsurprisingly, Turkey’s top 10 is dominated by the country’s banking giants — tightly regulated firms that have won plaudits for weathering the financial crisis in rude health. Also present are the country’s two biggest holding companies — Sabanci and Koc — and Turkcell, the dominant telecom firm.

Standard & Poor’s Michael Orzano, associate director of global equity indices, says the index has been created to reflect CIVETS economies becoming “increasingly important” to international investors.

Turkish stocks make up 21% of the weighted index, slightly trailing South Africa and Indonesia but a significantly higher percentage than Columbia, Vietnam and Egypt. Turkey-watchers say the index is likely to become an important tool to track Turkey’s performance relative to congruent economies in other regions. Economists note that Turkey’s neighborhood — plagued by euro-zone debt woes and Middle East political crises — could make it tougher to maintain rapid growth than other CIVETS, with the exception of Egypt.

But if Turkey does manage to maintain robust growth and preserve financial stability, it may not be long before the discussion of whether Turkey deserves a promotion to the ‘BRIC’ premier league is back on the agenda.

via Turkey at Heart of New ‘Not-Quite-BRIC’ Index – Emerging Europe Real Time – WSJ.