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BlackRock optimistic on Eastern Europe in 2014, Advisory and Opinions - EquitiesPoland.pl
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Advisory article

BlackRock optimistic on Eastern Europe in 2014

A turning point in the performance of Eastern European equities may finally be on the cards this year, according to Sam Vecht, co-manager of the BlackRock Emerging Europe trust.

With the exception of the rally seen in late 2010, emerging European equity markets have struggled since the financial crisis.

The region saw another disappointing year in 2013, but Vecht argued equities are now attractive from a valuation perspective.

- It is not about investment stories and themes, it is all about the valuations, and there is real value to be found in emerging Europe at the moment, he said.

From a basket of Eastern European countries listed in the MSCI indices, the only country that made a positive return last year was Greece. Russia, Turkey and Hungary, by contrast, were down 10.6%, 39.5% and 15.7%, respectively.

- This year might be the year of the Eastern European renaissance, Vecht claimed. - It has been seven years in the doldrums and it is time for a change in sentiment.

The manager said the region is delivering a higher dividend yield (of around 4%) than emerging markets for the first time since the launch of the trust in 1994.

His biggest country call is Turkey, which now accounts for 20% of Vecht`s portfolio: a stark contrast to the underweight position he has held for the past three years.

Vecht is especially bullish on Turkish banks, with Garanti Bank and Halkbank among the trust`s fifteen largest holdings.

However, Russia still remains the trust`s largest country weight at 52.6% and oil giants Gazprom and Surgutneftegaz together make up over 14% of the trust.

- We are not a Russia fund, and we would have a lot less in Russia if the oil price falls significantly, Vecht said. - There are a number of stocks in Turkey, Poland and Hungary on our radar in case we need to switch.

The trust lost 0.2% over the year to 10 January, according to Morningstar, but remains up 114.5% over the past five years.

Source: InvestmentWeek.co.uk


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