Vienna Forum hears tales of caution

At InvestmentEurope’s Vienna Forum, fund selectors were interested in new ideas from asset managers, but most remain in listening mode while wider financial uncertainty persists.

These are nervous times for professional investors, and even more so for those with a fiduciary duty to safeguard the assets of worried clients. Many are not willing to leave their offices for too long, lest a surprise market move or announcement catches them off guard and exposed to potential losses.

At InvestmentEurope’s Vienna Forum, fund buyers from the region had more reason than most to be optimistic – with the higher growth emerging markets of Eastern Europe and Russia on their doorstep, there are at least visible opportunities for investment gains.

Fund selectors attending the event said they were still very much open to ideas and opinion, but many admitted it was taking longer to make decisions and shift from their present defensive stance for portfolios. “We are always interested in viewpoints and ideas,” said one. “But we have to be very careful at this time.”

Delegates to the Forum heard Renaissance Capital urge investors to be very discerning about the markets they engage with, since not all have the same economic outlook. Fund manager Karol Chrystowski said that within the region, Russia, Poland and Turkey were the most promising, offering a combination of positive demographics, economic growth, domestic consumption and supportive financial frameworks.

“Moscow, Warsaw and Istanbul are the financial centres of the future,” he declared. “The local capital base is growing. They don’t need to go through the established centres for an IPO, for example.” Regarding the debt crisis in the eurozone, Chrystowski said there are only two ways to address the problem – via gross domestic product or the currency.

He cited the example of the Baltic nation Estonia, which had a proportionately similar debt problem some years ago, tackled with big and immediate public sector cuts. “Six years later, no-one remembers this crisis,” he added. “But you need serious politicians.”

He said Russia was an obvious emerging market to back because it has the commodities the whole world wants, and which would prove to be an effective inflation hedge. Turkey’s advantage is its demographics, where the average age of the population is 28, versus 47 in Germany, providing a foundation for the growth of domestic consumption and thus economic growth.

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