EUROPE - Baring Asset Management's Emerging Europe Fund has sold its entire portfolio position in Turkey following the war in Iraq.
Turkey’s decision to deny the US access to Iraq via its airspace and the subsequent loss of a US aid package dashed the previously positive economic outlook, the company said.
BAM believes Turkey’s debt mountain will be unsustainable in the long-term and that its government is not fully committed to the IMF programme.
The fund is now overweight in Russia, Estonia, Hungary and Croatia. It is underweight in Slovenia, Czech Republic, Slovakia, Turkey and Poland.
BAM’s emerging Europe fund manager Klaus Bockstaller said: “An ability to respond quickly to changing economic and geopolitical issues in this region by actively managing the fund and adjusting asset allocations remains the critical factor to outperforming the benchmark.
“One sector we are positive towards is pharmaceuticals where despite long-term opportunities for the largest remaining independent companies in central Europe, valuations remain attractive relative to global peers.”
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