Turkey was the worst performing country in the Middle East, North Africa and South Asia in November, dropping by 9.7 per cent, according to a report by Menasa Capital Management.
Turkey was followed by Dubai at -5.4 per cent.
Turkey’s underperformance versus emerging markets during November occurred as many investors booked their gains in the midst of de-risking in global capital markets.
Dubai lost all of its October gains as regional investors reduced risk in their portfolios. Recent trading activity in the UAE has been dominated by short-term horizons as macro challenges continue to weigh on the financial sector.
Pakistan and Qatar climbed 6.1 per cent and 4.4 per cent respectively. A surge in foreign flow of funds into the Pakistani market was the main driver behind the month’s returns despite the 50bps rate hike as many investors considered the move to be towards the end of the tightening cycle. However, Pakistan remains an illiquid market from a risk perspective and, as such, has not warranted a material position in MCM’s portfolio.
Faris Abdulrazzaq, senior portfolio manager for MCM, says: “While the situation in Europe remains challenging we continue to remain selectively bullish on regional Menasa frontier and emerging markets given the re-acceleration of positive global macroeconomic data, QE2, continued low interest rates, improving regional economic fundamentals and sentiment, strong valuation support especially relative to fixed income, and improving earnings momentum.”
