Emerging markets draw more financial investors
The investors are seeing less risk in emerging countries’ banking industry. AP photoThe eurozone debt crisis has made investors wary of western European bank stocks and they are seeking more value and less risk in banks in central Europe, Russia, Turkey and even Africa.
The problems of western Europe’s banking sector, from losses on Greek debt to a bailout for Greek Cyprus that hit big depositors or the governance scandal at Italy’s Monte dei Paschi, have undermined old assumptions about relative stability.Central and eastern Europe in particular may require careful stock picking as the troubles of the euro zone, the region’s main export market, pile financial pressures onto bank customers.
But the MSCI emerging Europe financials index, which includes banks in Russia and Turkey, has so far held on to the 40 percent gains it made last year, outperforming MSCI’s overall stock index for the region which has slid more than 5 percent so far this year. By contrast, major European banking stocks have underperformed benchmark European stocks this year.