FT: Turkey gets fund boost as crises blow over
Posted by meb at August 26th, 2008
Fund managers are increasingly upping their exposure to Turkey, as political and economic pressures have eased over the summer, the Financial Times reported on Monday.
he main factor of the increased fund flow is shown as the Constitutional Court’s decision to survive the ruling Justice and Development Party (AKP) in a closure case in late July.
“Since then, the high court has ruled the AKP is legal, which has ended the political risk. Oil prices have come off their peak, which helps Turkey’s current account. And the central bank has removed the credit tightening it had put in place. All this has eased the problems, and valuations have been looking cheap,” Ghadir Abu Leil-Cooper, head of the emerging Europe, Middle East and Africa team at Baring Asset Management, told FT.
Stuart Richards, manager of the £25m Hexam Emerging European fund, raised his portfolio’s Turkey weighting from 6 per cent to 18 per cent in July and its exposure is now 19.5 per cent, the report said.
“By June, most of the bad news had been priced into the market. What Turkey needs most of all is foreign capital, and its political stability and reform has attracted foreign investment,” Richards added.
He predicted Turkey would perform very strongly for the rest of this year.
“Over the last month, inflation expectations have peaked, so the expectation of high interest rates is diminishing. The domestic economy has held up more than people were expecting, and second-quarter earnings have beaten expectations.”
source: Hurriyet daily
Elena Shaftan, head of Jupiter’s emerging European equity team, said: “Falling oil prices should improve the macro outlook for Turkey – a $10 decline in the oil price is estimated to improve the current account balance by $0.5bn and reduce inflation by approximately 0.5 per cent,” FT reported.
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