What happens now?

With this in mind, the third quarter GNP figures for Sweden are very interesting. Sweden reported an increase in GNP equal to a total of 6.9% driven by strong exports. Another interesting figure recently reported for the third quarter was Poland’s GNP increase of 4.2%. This is certainly lower than the increase in Sweden; however, what is interesting about this figure is that Poland was the only large country to show positive GNP figures during the entire crisis. In other words, the base effect does not support these figures. Once again it is exports, for the most part to Germany, that are the helping factor.

Sweden and Poland are not exceptions; in general exporting countries (and of course companies) are doing well. According to the latest report from the IMF, the world economy is expected to grow by 4.2% in 2011 – in other words, another good year for the world economy. When the world economy has a good year, it also has a positive impact on commodity prices and strong commodity prices are good for several of the countries in our investment region, what we call the East Capital Universe. In addition, countries in Eastern Europe are showing some of the lowest valuations in the Emerging Market world, and it looks like the forthcoming year can be exceptionally good for the region.

The best way to attain good exposure to Eastern Europe is through East Capital’s Eastern European Fund. The fund has outperformed index for eight of the nine years since inception, and if we choose to look at only the last two years returns have exceeded index by over 40%.

Peter Elam Håkansson
Written on flight OK 509 (Czech Airlines) between Copenhagen and Prague