European investors are concerned about how the end of the US Fed’s quantitative easing (QE) will affect liquidity for emerging markets, Fitch Ratings’ latest quarterly investor survey showed.

Fitch believes these concerns are likely to be focussed on the most vulnerable sovereign and corporate credits and that widespread credit distress in emerging markets is unlikely, the rating agency said.

Two-thirds of those polled expect concerns over the timing of QE reduction to drive volatility in the amount of cash flowing into and out of emerging market bond funds for the remainder of the year. The survey also found out that a further 21% said the flows into emerging market funds will decrease due to greater concerns over political risk.

The Q313 survey was conducted between July 1 and July 31 and it represents the views of managers of an estimated EUR 5.6trn of fixed-income assets, Fitch said.

Turkey is still vulnerable to shifts in market sentiment, its external finances remain a key sovereign rating weakness, and balancing growth, price and exchange rate stability concerns present a policy challenge, Fitch said in July in a non-rating action commentary.

Persistent political and social unrest could deter tourism, destabilise short-term capital inflows, push up inflation and damage economic growth, the rating agency warned last month.

Fitch upgraded Turkey to 'BBB-' from 'BB+' in November 2012. The Outlook on the rating is stable.