Investors ‘bearish’ on Turkish equities

DUBAI - Reuters

Fund managers remain cautious in expanding their investments in Turkey, a monthly Reuters survey of the region shows.

Because of political turmoil and currency volatility, managers have been bearish on Turkish equities for the past six months and they remained so in February. Only 7 percent expect to raise their allocations to Turkey, while 33 percent expect to reduce them.

However in Middle East, fund managers remain bullish on most of the region’s major equity markets, but some are shifting money from the United Arab Emirates to less richly valued markets, according to the survey results.

The survey of 15 leading investment managers, conducted over the past 10 days, found 53 percent - a four-month high - expected to raise their equity allocations to the Middle East over the next three months, while none expected to reduce them.

That optimism partly reflects the strong performance of Gulf stock markets in riding out global jitters over emerging markets in the last several months. With their large trade and state budget surpluses, Gulf economies are to a large degree insulated from the instability.

The optimism has carried over into the Gulf fixed income market, which has been outperforming many other regions in the past several weeks.

Although the prospect of a cut in U.S. monetary stimulus this year makes many fund managers cautious on bonds, 20 percent of them expect to raise their allocations to Middle East fixed
income over the next three months, while only 13 percent expect to reduce them.

The survey was conducted by Trading Middle East, a Reuters forum for market profesionals.
The survey continued to show a mix of opinions towards equity markets in the United Arab Emirates, where Dubai’s indexhas soared 159 percent since the end of 2012, raising concerns among some managers that it may be overheating.

Thirty-three percent of managers expect to raise their allocations to the UAE while 20 percent expect to cut them.

 Some money is flowing from the UAE to Qatar, where 47 percent of managers expect to raise their allocations and only 7 percent to decrease them.

Saudi Arabia, where 60 percent of managers said they expected to raise equity allocations, may be another beneficiary of changing fund flows.