Emerging equity funds cut exposure to Turkish banks to record low -report

Haci Omer Sabanci Holding

01/12/2021 15:26

By Sruthi Shankar
    Dec 1 (Reuters) - Global emerging market equity fund
managers have cut their holdings in Turkish banks to a record
low, data from Copley Fund Research showed, reducing exposure to
an economy grappling with a plunging currency and soaring
inflation.
    The percentage of funds invested in Turkish lenders fell to
a historic low of 18.6% last week, a sharp decline from the
nearly 80% in 2010 when it peaked, according to the data which
analyses filings of 247 actively managed funds with $500 billion
in assets under management. 
    The average weighting allocation to Turkish financials
shrivelled to 0.1% from well above 1.5% in 2010, while the total
amount of money invested in Turkish lenders across the sample
size stood at just under $360 million.  
    Turkish markets have been roiled in recent weeks with the
lira  TRYTOM=D3  tumbling 44% since the start of the year and
logging its second-worst ever month in November, hammered by
President Tayyip Erdogan's endorsement of sharp monetary easing
despite soaring inflation and widespread criticism. 
    "Turkey's questionable monetary policy has continued to chip
away at investor confidence, forcing emerging market managers to
cut allocations to their lowest levels on record this year,"
said Steven Holden, founder of Copley Fund Research, a data
provider. 
    "For financials exposure, emerging market investors are
instead betting on India, Russia and Mexico as their key
overweight holdings."
    Data from Copley Research also showed the percentage of
funds with an "overweight" rating on Turkish financials is at
16.6% versus close to 70% in 2010.
    The most widely held bank was Garanti Bank  GARAN.IS , with
7.7% of funds holding position though at a very low average
weight of just 0.04%. Spanish lender BBVA  BBVA.MC , which
already owns nearly half of Garanti, launched an offer to buy
the rest of the Turkish lender in mid-November.  urn:newsml:reuters.com:*:nL8N2SK26M
    Other financial stocks held by some global emerging market
funds were Akbank  AKBNK.IS , Sabanci Holding  SAHOL.IS  - which
includes a banking division - and Yapi Kredi Bank  YKBNK.IS .
     The lira plunge has boosted Turkey's exporter-dominated
stock market by more than 25% year-to-date with the main index
 .XU100  hitting a fresh record high on Wednesday. 
    However, the country's financial sector  .XBANK  - a
dominant force on its stock market - has gained less than 1% in
2021 as investors fear spiralling inflation, falling interest
rates and rising bad debt will spell trouble for lenders. 
    Emerging economy stock markets often surge when their
country runs into trouble as locals deem equities a relatively
safe asset, expecting companies to either ramp up prices to
offset spiralling inflation or benefit from a weaker domestic
currency if they export overseas. 

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Global EM funds exposure to Turkish banks falls to all-time lows
   https://tmsnrt.rs/3pkOn8m
Turkish financials among least held group by global EM investors
   https://tmsnrt.rs/31hSYAa
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 (Reporting by Sruthi Shankar in Bengaluru; editing by Karin
Strohecker/Mark Heinrich)
 ((sruthi.shankar@thomsonreuters.com; within U.S. +1 646 223
8780; outside U.S. +91 80 6182 2787;))