I came to Istanbul with high expectations. My business partner and Lunt Capital COO, Ryan Hessenthaler (you will be hearing a lot more from Ryan has he picks up the investment trek in mid-July!) told me it was one of the great global cities. Ryan is well traveled, so this comment set the bar high. My expectations were all met! Istanbul is an incredible city. It truly feels like an ideal blend of ancient and modern. I expected this mix, but I was struck by the truly ancient landmarks at every turn contrasted by a dynamic, modern financial center. Turkey seems to make this mix of ancient and modern look effortless and easy, but this masks both the immense opportunities and the pressing challenges. Turks are very patriotic, and they take great pride in the historical strength. They fully expect their growth and influence to continue on the global stage.
The views in Istanbul provide even the casual tourist with an appreciation of the city’s strategic location. The Bosporus connects the Black Sea and the Sea of Marmara, which empties into the Mediterranean. This city will always be relevant to global trade, and will project military power East and West. The history of Turkey and Istanbul must be studied in order to understand the region’s rivalries, alliances, and tensions. I drove from Europe to Asia and back to Europe over the course of a few hours. Geography and demographics alone provide Turkey with key economic advantages.
Politics and single party rule are clear stumbling blocks in the current evolution of modern Turkey. Turkey has once again reminded me that inflation undermines confidence and creates real friction in the economy. One of our clear themes as we have travelled is that central banks rule the financial world. Lack of perceived independence is undermining the Bank of Turkey. Reducing political pressure and using appropriate tools to battle elevated inflation would be a game-changers for Turkey’s financial markets.
Despite the clear challenges, I was struck by the optimism and confidence of those that I met with across a variety of industries. Conversations with strangers moved easily from business, to politics, and to religion—a clear contrast from many cities that I visited. My experience in Turkey was enhanced by the fact that I have been in Istanbul during the Muslim holy month of Ramadan.
Turkey’s financial markets are maturing and evolving. There will be plenty of growing pains ahead. I suspect that there will be many opportunities for a country where East meets West.