TheChek News Flow

UK says close to placing order for F-35 jets

Reuters cited sources last week as saying that Britain was likely to announce an order soon for 14 of the advanced jets, marking Britain's first firm F-35 purchase since it committed to buying 48 planes in 2012.

"We are moving towards that point," Hammond said when asked if he could confirm the imminent order.

"We will have to place a firm order very soon in order to have the first squadron ready to start flying training off the 'Queen Elizabeth' in 2018, which is our current plan," he said in an interview with Reuters Television during the Munich Security Conference.

The Queen Elizabeth is one of two British aircraft carriers currently under construction.

He declined to confirm that the order would be for 14 planes "because we haven't completed the process, but we will be making an announcement in due course".

Britain is expected to order the F-35 B vertical take-off variant of the Joint Strike Fighter.

It has so far taken delivery of three training jets.

The F-35, considered to be the world's most expensive weapons programme at $396 billion so far, was designed to be the next-generation fighter jet for the U.S. Air Force, Navy and Marines.

It is being built by the United States, Britain and seven other co-development partners - Italy, Turkey, Canada, Australia, Denmark, Norway and the Netherlands.

British companies such as BAE Systems (BAES.L) and Rolls Royce (RR.L) build 15 percent of each F-35 aircraft.

Hammond said he was not worried by reports of technical issues that could delay the F-35's entry into service.

A U.S. Defense Department report last week warned that software, maintenance and reliability problems with the stealth fighter could delay the U.S. Marine Corps' plans to start using its F-35 jets by mid-2015.

"This is a complex weapons procurement programme. There are always issues in the development of weapons like this, and this particular report comes in a long and well-established line of highly critical reports about weapons systems when they are at this stage of their development," Hammond said.

"The whole point of this internal appraisal is to highlight where the issues still are that need to be resolved in the programme. It is part of the process and it shouldn't be seen as a negative part of the process at all," he said.

Britain's Conservative-led government was embarrassed by its flip-flop two years ago on which variant of the radar-evading aircraft to buy, a decision which cost the British taxpayer at least 74 million pounds ($123 million).

U.S. officials are fanning out across the globe, privately warning international executives not to commit too much as they re-engage with Iran during a temporary easing of sanctions.

The outreach echoes some of the statements U.S. officials have made in recent weeks cautioning about the limited and temporary nature of the sanctions relaxation. In recent days, senior U.S. officials have also started touring global commercial capitals—including London, Paris and Dubai—and meeting executives from blue-chip companies to hammer home the message.

Treasury Secretary Jacob Lew said in an interview on Friday that he has personally taken on the issue in meetings with hundreds of American and international business executives in recent weeks. This effort included meetings he held at the World Economic Forum in Davos, Switzerland last week.

"It's really important that businesses understand that we are continuing to monitor transactions and enforce sanctions," Mr. Lew said. "It's really been our focus that we don't have any misunderstandings."

The Western powers and Iran completed in January an interim deal for limited sanctions relief in exchange for heightened international scrutiny of Iran's nuclear program. The deal stretches six months through July, when the Western nations will reassess Iranian cooperation. Some areas of trade subject to the temporary relief include automobile and commercial aircraft parts, petrochemical purchases and humanitarian goods, such as food and medicine.

At a meeting at the U.S. Embassy in London this week, Peter Harrell, the U.S. State Department's deputy assistant secretary for threat finance and sanctions, met British and French executives—including representatives from Royal Dutch Shell RDSB.LN -1.83% PLC, Total SA and the aircraft-engine division of Rolls-Royce PLC—to make it clear that any business now allowed with Iran must be limited to the six-month window of the deal, according to people familiar with the matter.

"The message we got is that you can't sign any long-term commitment," said one executive who participated in the London meeting. Spokesmen for Total, Shell and Rolls-Royce said they don't comment on meetings held by their executives.

Meanwhile, a group of French executives were invited to the U.S. Embassy in Paris on Friday for a similar meeting, according to two people familiar with the matter. The meeting was scheduled ahead of the planned arrival on Monday of a delegation of dozens of French executives in the Iranian capital, Tehran.

Critics of the agreement, including members of Congress, have complained that Tehran has reaped significant economic benefits from the deal, in addition to the sanctions relief.

They cite the strengthening of Iran's currency, the rial, since the agreement was announced in late November. And outside economic analysts estimate Iran's economic growth is expected to stabilize in the current fiscal year after contracting by 6% during the previous one.

"Iran's economy is showing signs of recovery after years of sanctions, due in no small part to the recent sanctions relief…and a perception that the Obama administration may no longer be committed to ratcheting up the economic pressure," said Mark Dubowitz of the Foundation for Defense of Democracies, which has advised Congress on Iran sanctions.

State Department officials declined to comment on specific meetings, but one official said Washington was reaching out to "the private sector globally to ensure that companies around the world understand the narrow scope of sanctions relief."

The purpose was also to make sure executives understood "the numerous U.S. and international sanctions on Iran that remain in force," this official said.

U.S. officials say they worry some executives may not fully understand the limited nature of the easing, and want to make it clear Washington is still ready to enforce remaining sanctions.

That is especially the case amid a public charm offensive by Tehran aimed at wooing Western businesses back to Iran.

Mr. Lew said in the interview that the pressure on Tehran will remain intense, as the majority of the sanctions remain in place and will be enforced. "People are focusing on incremental market impact, rather than the cumulative impact," he said. "You have to separate the two: Sanctions have had an enormous impact. The vast majority of the impact will still be felt. "

Last week, Iran's oil minister, Bijan Zanganeh, met Western oil and gas executives at a briefing at the World Economic Forum in Davos, mingling with Chevron Corp. CVX -4.14% and Shell among others.

"I understand that there is interest [by international companies in returning to Iran] and the Iranians are trying to play on this interest," said David Cohen, the U.S. Treasury's undersecretary for terrorism and financial intelligence, during an interview in Dubai.

"There has been some sense that this interim deal resulted in substantial relaxation of sanctions and that is just not the case," he said. "I'm trying to make sure there is no misunderstanding."

Dubai, part of the United Arab Emirates, could be an early barometer of Washington's effectiveness in keeping sanctions pressure on Iran during the six months of temporary relief. Dubai is home to thousands of Iranian traders—many of whom have been concocting ways around sanctions for years. Many European and U.S. companies that have done business with Iran in the past have bases and, often, regional headquarters in Dubai.

Caught in the middle are companies that stand to gain in the current opening. Western auto and aviation firms, for instance, must tread cautiously over the next six months to both take advantage of the new opportunity and avoid running afoul of current sanctions.

In January, Renault SA RNO.FR -0.75% said it was preparing to start sending car parts to Iran. But the auto maker is still wrangling with how to send preassembled car kits and getting paid for them under existing U.S. and international banking and finance sanctions, according to a Renault spokesman.

In an interview, Carlos Ghosn, who heads Renault and Nissan Motor Co. 7201.TO -0.78% said the auto maker wasn't in a rush to get to Iran. "The hype about Iran is premature," Mr. Ghosn said. "If the sanctions are not lifted, we will not go."

Investors overlook Imperial Oil because it's 70% owned by ExxonMobil. But strong production growth could drive the stock higher.

Imperial Oil is one of the best-kept secrets in the North American energy industry. The large Canadian oil and gas company historically has generated some of the industry's highest returns, but lately its shares have flagged.

Imperial, which trades on the New York Stock Exchange (ticker: IMO), priced in U.S. dollars, produces oil mainly from unconventional fields in Western Canada, including the Syncrude oil-sands project in Alberta in which it has a 25% stake. It also operates three refineries and sells gasoline through Esso service stations.

The company, 70% owned by ExxonMobil (XOM), ambitiously plans to double its energy output to the equivalent of 600,000 barrels a day by the end of the decade, mostly through development of the Kearl oil-sands project. "Imperial offers the best of Exxon," says Paul Cheng, an energy analyst at Barclays, who has an Overweight rating on the stock and a price target of about $46, 12% above its recent quote near $41. But based on Imperial's growth, the shares could be worth much more than that.

Imperial's Kearl oil-sands plant in Alberta, Canada.

"Imperial now represents 6% to 7% of Exxon's production, but should account for two-thirds of its production growth over the next five years," Cheng points out. Yet, the stock, which once traded at a premium to Exxon shares, now changes hands at a slight discount, fetching 10.7 times projected 2014 earnings, while Exxon, at $94, commands about 12 times.

So why is it languishing? The company's reputation for operational excellence has been hurt by cost overruns on the first phase of the Kearl project, which is now projected to cost 12.9 billion Canadian dollars (US$11.6 billion), C$5 billion more than originally estimated. And the ramp-up of Kearl production has been slower than expected, at a time when U.S. investors are souring on Canadian oil producers, thanks to strong growth in U.S. production.

There also are concerns about transporting increased amounts of Canadian crude, given the delay in the Keystone XL pipeline and recent oil-train accidents. And there is environmental opposition to the oil sands as a dirty, carbon-heavy source of crude.

Kearl is Imperial's main focus. The first phase is complete, and the project's second is scheduled to be finished late next year. Each phase is expected to produce 110,000 barrels a day of heavy crude, with Imperial getting 71% of it and Exxon, 29%. Looking out to the end of the decade, Imperial may expand Kearl production to 345,000 barrels a day. Kearl and a heavy-oil field called Cold Lake, now under expansion, will account for the bulk of Imperial's production. Part of Imperial's appeal is that these fields have very long estimated reserve lives—up to 40 years.

IMPERIAL IS LESS well known in the U.S. than the two other major Canadian energy producers, Suncor (SU) and Canadian Natural Resources (CNQ), because of the large Exxon stake and Imperial's low profile. Imperial doesn't hold earnings conference calls and has only limited contacts with investors.

Imperial, expected to earn $3.2 billion, or $3.80 a share, this year on revenue of $33 billion, isn't small. Its stock market value is $35 billion, and its public float, $10 billion. On Thursday, the company reported earnings for 2013 of $2.5 billion, or $2.99 a share, on $30 billion in revenue.

Imperial pays a skimpy 1.2% dividend yield, below that of Canadian Natural Resources, Suncor, and the major international energy companies.

Rich Kruger, a career Exxon executive who became Imperial's CEO last year, has acknowledged that the dividend isn't competitive, but so far, the company has boosted the quarterly payout only by a penny, to 13 Canadian cents (11.7 U.S. cents) per share. Imperial has a great balance sheet, with just $5 billion of debt and a Triple-A credit rating from Standard & Poor's.

Why hasn't Exxon bought the remaining 30% of Imperial? Cheng thinks it doesn't feel a need to do so, because it already controls Imperial and would have to pay a sizable premium to buy out minority holders. Others say that Exxon is wary of resource nationalism in Canada and wants to preserve Imperial as a Canadian company.

Here's what one fan of the stock tells Barron's: "Imperial does the opposite of what others do to boost their stocks. It doesn't have earnings conference calls. It doesn't do a lot of investor presentations. It doesn't pay a dividend it can't afford, and if it sees good investment opportunities with double-digit returns, it exploits them."

Until recently, it did buy back stock, reducing its shares outstanding by half since 1995. In the past few years, however, it has focused its cash on expansion.

"Imperial is at the peak of its capital spending," says Cheng, adding that it could start generating free cash flow after capital spending by year-end 2014 and be in a position to return more cash to shareholders.

A couple of things would benefit Imperial. The first would be expanded pipeline capacity from Canada. The second would be a narrowing of the wide gap between Canadian heavy crude, now around $80 a barrel, and the U.S. benchmark, West Texas Intermediate, at about $98. Imperial should be helped by the weak Canadian dollar, now trading at about 90 U.S. cents, since its costs are mainly in local currency and its revenue is linked to the greenback.

Imperial offers a reasonably priced way to play one of the best production growth stories among large North American energy companies.

The Swedish telecom's technology-licensing deal with Samsung Electronics creates buzz on earnings and the stock's potential to rise 25% in the next 12 months.

A technology-licensing deal created a buzz around LM Ericsson Telefon's earnings and the stock's potential to rise in 2014. Ericsson's shares (ticker: ERIC-B.Sweden) can add 25% in value in the next 12 months as the provider of telecom-network equipment reaps the benefits not just of the licensing deal, but of an improving environment for capital expenditures, the possibility of industry consolidation, and prospects of fatter profit margins.

Ericsson's stock suffered static in 2013, adding less than 10% in value as the Stoxx Europe 600 technology sector gained almost 15%. At Friday's close at 80 Swedish kronor ($12.22), the shares are more than 12% off their 52-week high of SEK90.95. However, almost a quarter of the analysts who follow Ericsson reckon the shares could be worth SEK100 or more. Late last week, the Stockholm-based company was trading at 13 times forecast 2015 earnings. That looks like a relatively undemanding mark to beat, especially compared with a rival like Alcatel-Lucent (ALU.France), with a multiple of over 17 times.

THE "MULTIYEAR" AGREEMENT Ericsson renewed last week with Samsung Electronics (005930.Korea) allows the Korean company to use Ericsson's patents on various network and handset standards. A prior agreement expired in 2011. The settlement came as a surprise and concluded a long patent-related dispute for Ericsson, which has a portfolio of over 33,000 patents.

Details weren't disclosed, but as a result, Ericsson booked SEK4.2 billion in sales and SEK3.3 billion in net income in the fourth quarter. Assuming those figures represent fees for the two years after the license lapsed, Samsung would pay SEK2 billion a year, adding SEK1.5 billion in Ericsson operating income at a 75% margin. Ericsson reported operating income of SEK17.8 billion on SEK227.4 billion of revenue last year.

Sales were flat in 2013, held back by a fourth-quarter pause in spending by AT&T (T), but they should pick up in the second half of 2014 as carriers like cash-rich Vodafone Group (VOD) boost capital expenditures in Europe, and China Mobile (CHL) rolls out its advanced LTE network. Ericsson gets over half of its revenue from its network business; the rest comes mostly from services. Revenue is forecast at about SEK230 billion this year, rising to SEK238 billion in 2015 and SEK250 billion in 2016. As sales growth picks up and operating costs remain under control, Ericsson should see profit-margin improvement. Gross margin can climb to 39% in the next few years, from 33.5% in 2013, say UBS analysts. With a tail wind from a weakening Swedish currency, that seems very possible. Ericsson has a market value of over $40 billion and earned SEK4.61 per share in 2013. That figure should rise to SEK5.31 this year and to SEK6.05 in 2015.

There's also a chance for consolidation in the network-gear industry. The likelihood grew last year after Nokia (NOK) agreed to sell its handset business to Microsoft (MSFT), effectively becoming a wireless-equipment supplier with a big war chest. Consolidation would lead to concentration—and higher margins. Besides the upside potential, Ericsson offers shareholders a juicy dividend and shares that yield about 4%.

Those are all reasons for investors to connect with the stock.

Russia’s foreign minister and his European and American counterparts traded heated words on Saturday morning over civil unrest in Ukraine.

John Kerry, the US secretary of state, Catherine Ashton, the EU’s high representative for foreign affairs, Nato chief Anders Fogh Rasmussen and president of the European Council Herman van Rompuy all sternly rebuked Russia for its stance towards its eastern European neighbour in Munich this weekend.

Defence chiefs, foreign ministers and world leaders are meeting in the Bavarian capital for the annual Munich Security Conference. The issue of Ukraine – alongside the crisis in Syria – has been one of the major topics of discussion among delegates.

As Ukraine’s anti-government protests have escalated in recent weeks, reports of kidnappings, torture and the murder of opposition activists have begun to emerge.

Sergei Lavrov, Russia’s foreign minister, accused the West of stoking tensions in Ukraine. “What do . . . [these] increasingly violent protests have to do with promoting democracy?” Mr Lavrov asked. He said Ukrainian opposition activists were guilty of human rights violations – including the torture of Ukrainian police – and were racist and anti-Semitic.

Mr Lavrov’s remarks followed the assertion of Mr van Rompuy that “the future of Ukraine belongs in the EU.” The panel on which the two politicians appeared earlier saw Nato’s Mr Rasmussen declare that “Ukraine must have the freedom to choose its own path without external pressure.”

The strongest words of condemnation came later, however, from US secretary of state John Kerry.

“We see a disturbing trend,” Mr Kerry said, in a long and impassioned speech on the future of Europe and America’s relationship. “Through many parts of eastern Europe and the Balkans the aspirations of citizens are being trampled beneath corrupt and oligarchic practices.”

Nowhere, Mr Kerry said, was the fight for a democratic European future more apparent than in Ukraine.

The EU’s head of foreign affairs, Ms Ashton, has met Ukrainian opposition leaders on the fringes of the conference.

“I am deeply alarmed by the violence and cases of intimidation and torture,” Ms Ashton said, adding that she was “particularly appalled” by the torture of a leading opposition activist Dmytro Bulatov, and reports that Ukrainian authorities had tried to arrest him in his hospital bed.

Ms Ashton said she would be travelling to Ukraine next week on behalf of the EU.

Cover story: Barrons Roundtable, Part 3 offers picks from Mario Gabelli (JRN, DBD, CHMT, NFG, WFT, POST), Brian Rogers (AMAT, CNX, CVC, ETR, NEM, PRMSX), Fred Hickey (CEF, AEM, GG, GDXJ, CCJ), and Scott Black (ESRX, ACT, BCEI, KLAC, SNDK). 

Features: 

1) Positive on AKAM: Company handles up to 30% of the worlds Internet traffic with it servers, providing a growing revenue stream, which along with strong profit margins could lead shares to climb 25%. 

2) Positive on SWK: Company has disappointed in wake of Niscayah acquisition, but as it better integrates the Swedish company and makes gains from housing recovery, shares could rise 20%. 

3) Positive on GM, F: Both automakers have bounced back from their pre-recession troubles, and shares trade at humble levels, with Ford being the stronger company in the long run but General Motors the better bet for 2014. 

Tech Trader: Positive on ERIC, NOK, ALU, JDSU: Companies should see a boost this year from increased construction of telecom infrastructure in places such as China, which is starting a significant build-out of its 4G broadband wireless networks; Cautious on AAPL: Company continues to deliver tremendous free cash flow, but its revenue growth will not likely return to double digits, and until new product categories emerge, investors may be stuck with an also-ran stock multiple. 

Trader: Some observers say emerging-market issues arent material enough to U.S. equities to justify more than a correction; Positive on DD: Company has a strong balance sheet and a long track record of growth, and is big and diversified enough to outperform should market turmoil continue; Cautious on BBBY: Companys shares are down after missing earnings expectations and a slow January, drop could make current share price a relatively cheap entry point, since by almost any metric the shares are trading at a significant discount to historical levels. 

Follow-Up: Cautious on Lenovo: Deals for IBM server business and Motorola account for almost 40% of companys market value, and will dilute existing shareholders by as much as 8%, while Motorola will require a significant overhaul and spread management capacity thin; Positive on ECPG: Companys low-cost, India-based systems and staff give it big edge in the U.S., and it continues to reward shareholders. 

Small Caps: Positive on WTW: New chief executive James Chambers has a turnaround plan that could reverse companys fortunes and send the stock significantly higher, part of which includes effort to convince companies that using its system can drive down their healthcare costs. 

Mutual Funds: Interview with Marc Tommasi, Head of Global Investment Strategy, Manning & Napier, who favors consumer-driven emerging market plays but worries about rising U.S. rates (picks: Tesco, SLB, Talisman Energy, Accor, British Sky Broadcasting, Encana, Carrefour, Cameco, Fanuc, Nestle). 

European Trader: Positive on ERIC: Multiyear agreement with Samsung could help companys shares add 25% in value in the next 12 months as it faces an improving environment for capital expenditures, possibility of industry consolidation, and prospects of fatter profit margins. 

Asian Trader: Unlike most of their Asian counterparts, Vietnamese stocks are expected to extend last years strong performance through 2014. Emerging Markets: The Feds easy money policy covered up the fact that many emerging markets were spending more than they earned, building large current-account deficits. 

Commodities Corner: With supplies of Arabica coffee beans so plentiful that they dont cost much more than lower-grade robusta beans, roasters are more likely to seek out the former. 

Streetwise: New jobs are popping up because of technology, but they arent as plentiful as those that originally helped build Americas middle class; market observers are watching for more consumer spending or for Chinese output to rev up.

VIENNA (Reuters) - Austria is open to Carlos Slim's America Movil (AMXL.MX: Cotation) taking a majority stake in Telekom Austria (TELA.VI: Cotation), the head of the state holding company said, paving the way for a long-awaited move by the billionaire investor.

Rudolf Kemler said it was a "secondary question" whether Slim, who is keen to reduce his dependence on the increasingly regulated Mexican market, bought a majority of Telekom Austria as long as the Austrian government kept at least 25 percent.

"For strategically important companies ... we don't want to go below a blocking minority," Kemler told Austrian ORF radio on Friday, referring to a 25 percent threshold that ensures the government's point of view is considered on major decisions.

"The question of Carlos Slim's overtaking us and whether it is by only two or three percentage points or whether he goes above 50 (percent) is actually a secondary question," said Kelmer, who is also chairman of Telekom Austria.

America Movil declined to comment.

Telekom Austria shares, which have been buoyed by takeover speculation as well as optimism for the sector, closed up 0.68 percent at 6.487 euros, slightly outperforming the Stoxx European telecoms sector index .

America Movil's stock was down 1.6 percent at 1744 GMT, double the decline posted by Mexico's IPC blue-chip share index

.MXX.

Austria, through its OIAG holding company, is the biggest shareholder in the former state telecoms monopoly, with just over 28 percent. America Movil holds just under 27 percent.

Bankers and industry sources have told Reuters they expect America Movil to make a bid for majority control soon.

Slim, who bought an initial large stake in Telekom Austria in June 2012 along with a major stake in Dutch KPN (KPN.AS: Cotation), is keen to avoid a repetition of the problems he had in the Netherlands, where he was forced to retreat after a takeover offer seen as hostile was rebuffed.

America Movil Chief Executive Daniel Hajj said in an interview last year the Latin American telecoms group did not plan a hostile takeover of Telekom Austria, and both sides have described the relationship as cordial and constructive.

Acquiring a majority in Telekom Austria would allow Slim, who has no history of holding minority stakes, to consolidate the company's results in those of the America Movil group.

Although Telekom Austria's market value has fallen by about a third since America Movil first bought its stake, it has risen again by about 9 percent this year on hopes for more consolidation and better margins in European telecoms.

Telekom Austria is the biggest player in Austria, where it is in cut-throat competition with Deutsche Telekom's (DTEGn.DE: Cotation) T-Mobile and Hutchison Whampoa's (0013.HK: Cotation) Drei.

All-inclusive monthly packages are still available for as little as 10 euros ($13.56) per month and are among the cheapest in Europe despite Drei's acquisition of rival Orange a year ago.

Telekom Austria Chief Executive Hannes Ametsreiter said on Thursday he did not rule out a return to the price wars of the past as he expected new players to emerge this year to take advantage of cheap capacity on Drei's network.

Telekom Austria also operates in seven southeastern European markets outside Austria including Bulgaria, Croatia and Belarus.

The four biggest global stock markets recorded sharp losses in January for the first time in four years, as weeks of turmoil in emerging markets spread to the developed world.

Stocks in the US, UK, Europe and Japan have not posted simultaneous declines for January since 2010 when the eurozone debt crisis was at its height, prompting investors to warn the inauspicious start did not bode well for the rest of the year. US central bank tapering and a slowing Chinese economy are likely to weigh heavily on sentiment.

The spreading gloom was prompted by a mass exodus from the emerging markets with investors pulling money out of the developing world at the fastest rate since 2011.

The biggest losers from the turmoil – most intense in the Turkish and South African currency markets – included big dedicated emerging market investment groups such as Franklin Templeton, First State and Ashmore. All three have suffered outflows and redemptions, according to investment managers.

Mark Mobius, Templeton’s top fund manager, refused to be rattled despite the hit to his portfolios, insisting the dive in some of the emerging markets offered opportunity rather than danger for his funds.

“We’re happiest when markets are down,” he said. “We want to take advantage of any declines in these markets.”

Others were less sanguine. “It has been a bloody week,” said a manager at an emerging market debt fund. “We can recover from one week. But if this goes on, then that will have big ramifications for our profit margins.”

The exodus from emerging markets has been led by retail investors, according to fund managers, while institutional groups, such as pension funds, have held their nerve and stuck to their positions.

“Retail investors are running for the exits. They see the turmoil, they read the newspapers and they have a shorter time horizon,” said Michael Ganske, head of Emerging Markets at Rogge Capital Partners, a fixed income fund with $59bn under management.”

“Whenever investors are panicking, that is a good buying opportunity,” he added.

The FTSE 100 finished down 3.5 per cent for January, the Eurofirst 300 was 1.9 per cent lower, the Nikkei 225 dropped 8.5 per cent and the S&P 500 fell 3.6 per cent over the month in New York.

Emerging market equity outflows rose to $6.3bn in the week up to January 29, the biggest weekly withdrawal since August 2011, with a total for the month hitting $12.2bn, according to data from EPFR Global, which tracks investment flows.

Emerging market bond funds also suffered, with $2.7bn in outflows over the past week and $4.6bn withdrawn so far this year.

However, there have been winners from the volatility. Some hedge funds such as Moore Capital have been shorting emerging markets while M&G Investments and Aberdeen Asset Management have also hedged positions in Turkey.

One emerging markets investor said: “A lot of funds saw this coming. Turkey has been an accident waiting to happen.”