High valuations, rising equity issuance and plentiful financing in a growing variety of formats all point to Istanbul making progress toward its goal of becoming an international financial centre.

The trend toward giant international stock exchanges highlights the value of listing on a more specialised market for companies in central and eastern Europe. Warsaw and Vienna are competing for that business.

Turkey’s central bank is attempting an unusual combination of tightening monetary policy using reserve requirements, while combating speculative inflows through interest rate cuts. But the outcome remains uncertain.

Many Turkish banks enjoyed record results in 2010, with high return on equity, efficient operations, strong capital ratios and falling inflation. However, changing domestic economic conditions will drive new strategies in 2011 and beyond.

A promotion for the former head of Kazakhstan’s sovereign wealth fund suggests there is momentum behind ambitious privatisation plans in the country that could transform the local capital markets. 

With inflation eroding real returns, investors are ready to take on greater equity market risk. But only if other risks can be excluded from the mix.