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Raiffeisen says oil price will dictate bets in emerging stocks
[WARSAW] Equity investors should bet on Turkey and central Europe this year as long as the oil price remains near an almost six-year low, and shift to Russian shares if crude rebounds, according to Raiffeisen Capital Management.
Brent below US$50 is "reducing inflationary pressure and increasing consumption" in energy-importing nations, Andras Szalkai, who helps manage US$2 billion of emerging Europe assets at Raiffeisen, said by phone from Vienna.
"However, there's a chance that oil prices may rebound in the second half of this year on higher demand, which may boost Russian stocks."
Mr Szalkai, who has overweight positions on Turkish and Romanian stocks, is neutral on Polish equities and underweight on Russia, said sanctions by the US and European Union would be the other major consideration for investors before deciding to invest in Russia.
The 16 per cent rally in dollar terms for the Borsa Istanbul 100 Index last year hasn't discouraged Raiffeisen from investing in Turkey which will continue to benefit from the current oil price, Mr Szalkai said. Brent gained 0.6 per cent to US$49.42 a barrel at 1:13pm London time.
"Despite a big jump last year, Turkey's stocks still look nice in 2015 and especially in the first half of this year," he said. "We're looking at transportation companies and banks."
In Poland, where the benchmark WIG20 Index lost 18 per cent in dollar terms last year, Mr Szalkai said investors could pick oil refiner PKN Orlen SA, and stocks offering relatively higher dividend yields like PZU SA, Bank Pekao SA and Bank Handlowy SA.
"Polish interest rates will probably be cut further while bond yields are on a downturn," he said. "So there is still some money to be made on stocks paying high dividends."
In Russia, export-oriented companies that benefit from a weak ruble and lower production costs are worthy of investment, he said. The currency slumped beyond 70 a dollar on Friday after the central bank unexpectedly cut interest rates.
He said he is concerned about Russian banks that are "facing financing trouble" and are in need of restructuring, though their market prices seem to have factored in the situation.
"When you invest in emerging Europe you just can't avoid Russia," Mr Szalkai said. Still "the outlook depends on oil and sanctions."