Turkey, United States, Michelle discussed on Bloomberg Markets
For investors to buy, joining us now is Michelle portfolio manager for. Vigil partners LTd in London Michelle thank you so much for being with us you have an incredible amount of experience investing. In equity derivatives an emerging markets going back to Leeman brothers looking at this. Scenario is Turkey flashing a huge by signal given how much. It's assets have been beaten. Up right now First of all it depends, which asset class you're talking about but clearly when they went to seven to the dollar and interest rates went. To high twenties it started becoming attractive to investors on every basis however there is fundamental problems, with the Turkish situation as we speak given the high debt levels in dollar terms and that's not going to go away. And the the confidence of the market on, the ability of. The, central Bank to control inflation is simply not. There for a long term turnaround and a long-term investment okay, so just to point out that that was. One two three days ago that we were seeing the Turkish lira seven versus the dollar right now we're five point eight Yeah so I'm just wondering you know talking about let's say equities Turkish equities have gotten really beaten up in particular their financial industry what what about in that. Area. Are there opportunities there or given the fact that you, do see a wider set of issues here are those set for for more declines and, even a potential failure I think I think. The the situation requires a slowdown, in the Konami whatever you see it either. The crisis continues and and you get a natural Snowden economy, or, the interest rates are, hiked in, the classic, orthodox way, to deal with inflation and the market and loss of confidence in your. Car so either way you're going? To see a slow down and when you see a slowdown you tend to see a rise in? NPL's although the banks are well capitalized and we'll regulated by say And you just never. Know how high Dan peels go, as we've seen in other countries like Italy. Spain Greece NPL's can go much higher than in the last Crisis two thousand eight when they went to five six percent NPL rates if they started getting close to ten. Percent then these banks do need capitalization and spore the equity investments I would say would be at, the, right time when they need the recapitalisation rather than now What is positive for the Turkish situation is obviously that the the sovereign debt. Level is relatively low compared to some of these other countries like mentioned like Italy Spain or Greece for example, at thirty percent to p there is some room for so sovereign? Support and bailout Michelle is someone that helps to manage, the money of high net worth families if you were going? To plan a trip in the fall to, go to Turkey to prospect for potential investments what kinds of meetings, would you want to have lined up with. What kinds of companies would it be the banking industry or would it be things like conglomerates and consumer Staples I mean given the the the the the weaker lira is a necessity to balance we balance the economy I. Would say the exporters would be the highest beneficiary so the experts would be the ones I'll be most comfortable with to make investments in and and and the, let's, say the. Banks we, do have a backstop either be it as strong parent or or or a related. Entity which can support the Bank in case they do need recapitalization looking for. Some of their bonds which are now yielding eleven twelve thirteen percent in dollars which I think could be attractive, if you know that there is a backstop so I'm just wondering? Broadening out here given the fact that we did see, emerging market currencies track that of Turkey during its swoon And I'm wondering how worried you. Are at this point just in general about the developing markets and in particular the equity markets which have been really tied to currencies I think you have to go back and see okay what what is leading all of this? And, that's probably what's going on in the US be it the strong dollar or the end of q. e. or. More importantly at the moment is the trade wars yeah I think these are the real triggers rather than Turkey trickling and the problem. In the rest, of developing markets so if you see some kind of Alleviate the problem for example the trade war with the US China coming down then, I, think emerging markets in much better position or if the dollar has stabilized then emerging markets would be. Much stronger position regardless where Tokyo's thank you very much for being with, us Michelle, the net she is a portfolio manager for Vetere partners LTd, they are based in London where, they help, manage the assets of wealthy individual families and just taking a. Look. At, the Turkish lira right now trades, at five point seven seven to the US dollar, at, gained just a little bit less than? Three percent so far today and there's a little bit of a rebound just broadly in MCI tracked emerging-market currencies but you have to think how long will that reprieve. Last, especially if as Michelle was saying you know the strong dollar kind of concept continues to weigh over markets yes. Well we another Turkish lira is still Well it's lost more than fifty percent of its. Value. Against, the US dollar this is Bloomberg This is a Bloomberg market minute. Stocks are surging after retail giant WalMart reported its best sales growth in more than a decade and China's ministry of commerce. Said it would hold talks with American officials to resolve the trade war between the two countries evidence. Of a strong labor market keeps piling up first-time. 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