Views from the Ground: Emerging Europe

Views from the Ground: Emerging Europe

Emerging Europe is undergoing rapid political, economic, and social change. Though we see opportunities in various countries across Emerging Europe, from Greece to Kazakhstan, this paper is focused on two of the region’s deeper markets — Poland and Turkey.

The outlook for each country is still uncertain. However, as active stock pickers with a solid understanding of the political, economic, and social landscape in which we invest, we note that now is the time to seek investment opportunities — when markets are under-owned and uncertainty ahead of elections grows.

Click on the fund name for a list of the top ten holdings for the Emerging Markets Great Consumer Fund and/or the Emerging Markets Fund as of the most recent month. Holdings are subject to change at any time.

The views and information discussed are subject to change and may not reflect the current views of the writer(s). The views expressed represent an assessment of market conditions at a specific point in time, are opinions and may not be relied upon as investment advice regarding a particular investment or markets in general. Such information does not constitute a recommendation to buy or sell securities or investment vehicles

Definitions 

Basis Point (bp) is a unit that is equal to 1/100th of 1% and is used to denote the change in the value or rate of a financial instrument. Borsa Instanbul 100 Index is a free float market capitalization-weighted index composed of BIST Stars Market Segment companies. Current Account Deficit (CAD) is when a country imports more goods, services, and capital than it exports. Foreign exchange (FX) is the conversion of one currency into another at a specific rate known as the foreign exchange rate. Fiscal Deficit is a shortfall in a government’s income compared with its spending. Fixed Asset Investment (FAI) is a measure of capital spending. It refers to any investment within the measurement period in physical assets, such as real estate infrastructure, machinery, etc. that are held for more than one year. Foreign Direct Investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country. Gross Domestic Product (GDP) is the monetary value of all the finished goods and services produced within a country’s borders in a specific time period. MSCI Emerging Markets (EM) Index captures large and mid cap representation across 24 Emerging Market countries. Price/earnings (P/E) ratio is the ratio for valuing a company that measures its current share price relative to its per-share earnings. Standard Deviation is a statistical measure of volatility and is often used as an indicator of the ‘risk’ associated with a return series. Standard deviation of return measures the average deviations of a return series from its mean. A large standard deviation implies that there have been large swings in the return series of the manager. Visegrad Group (V4) is an informal regional format of cooperation between the four Central European countries: Poland, the Czech Republic, Slovakia, and Hungary.Warsaw Stock Exchange General Index (WIG) is a major stock market index which tracks the performance of all domestic companies (investment funds are excluded) listed on the main market of The Warsaw Stock Exchange.

Investment Considerations — There can be no guarantee that any strategy (risk management or otherwise) will be successful. All investing involves risk, including the potential of loss of principal.

Emerging Markets Risk — The risks of foreign investments are typically greater in less developed countries, which are sometimes referred to as emerging markets. For example, political, legal and economic structures in these country may be changing rapidly, which can cause instability and greater risk of loss. These countries are also more likely to experience higher levels of inflation, deflation or currency devaluation, which could hurt their economies and securities markets. For these and other reasons, investments in emerging markets are often considered speculative. Similarly, investors are also subject to foreign securities risks including, but not limited to, the fact that foreign investments may be subject to different and in some circumstances less stringent regulatory and disclosure standards than U.S. investments.