Top investors cut emerging Europe equities as Ukraine turmoil escalates: Reuters poll

Fri Feb 28, 2014 9:29am EST
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By Natsuko Waki

LONDON (Reuters) - The world's top investors cut exposure to emerging European equities to a five-month low in February as they fretted over a spillover from tensions in Ukraine and Russia, Reuters polls showed on Friday.

Concerns over China's economic slowdown also prompted fund managers to trim their Asian equity holdings to a four-year low and instead boost euro zone equity weightings to the highest since June 2011.

The monthly polls covering 50 leading investment houses in the United States, Japan and Europe were taken between February 12 and 27, when three months of protests in Ukraine culminated in the overthrow of Moscow-backed Viktor Yanukovich, leaving an unstable political situation.

Central European assets have been under pressure as investors fear a possible default in Ukraine's sovereign debt and the prospect of military conflict involving Russia.

However, overall equity holdings stood at 51.1 percent, holding near a one-year high, underscoring investor confidence in the U.S.-led global economic recovery.

"Despite the current emerging market weakness, an overall improving economic environment for 2014 should be supportive for risk assets in the next quarters," said Boris Willems, strategist at UBS Global Asset Management.

"Nonetheless, investors should accept higher volatility, as negative news might weigh heavier on market sentiment."

Emerging European equity holdings fell to 1.8 percent, after hitting a four-year high of 2.4 percent last month.   Continued...

Armed men stand guard at the Simferopol airport in the Crimea region February 28, 2014. REUTERS/Baz Ratner