Three major multilateral institutions – the IMF, EBRD and World Bank – have recently published revised growth outlooks for 2010. They are all turning more positive on the world as well as on Eastern Europe but are still falling somewhat short of our forecasts for the region in general and for Russia in particular.
It is nevertheless a positive indication that these influential institutions are upgrading their forecasts. They are arguing quite similarly, i.e. the recovery in Eastern Europe is stronger than previously expected on the back of stronger commodity prices, resumption of capital flows and increased risk appetite but also point out that the recovery is still fragile and uneven.
There was an intense dialogue with investors in yesterday’s webcast. Peter and Marcus commented on topics posted by watchers from around the world in the East Capital Live Q&A. The first figures indicate hundreds of participants from 15 countries.
On top of investors’ agenda was the expected market performance in Eastern Europe, East Capital’s strategies for portfolio management as well as the growth outlook and potential risks for the different regions. Peter and Marcus shared their insights from being on the ground in Eastern Europe.
Marcus said that the pessimism towards Eastern Europe has been replaced by cautious optimism, with investor concern moving away from Eastern Europe towards Southern European debt issues. He explained that one of the biggest misunderstandings about Eastern Europe is in regard to its debt levels, stating that: "Eastern Europe does not have a structural debt problem. The average amount of government debt in the region is 40% of GDP, compared to the Eurozone where the figure is around 80% of GDP."
Peter answered questions relating to the state of Russia and commented that Russia has benefited from high commodity prices over the past year, and that it is expected that this money will be reinvested into areas like banking, consumer goods, retail and real estate, helping to underpin the recovery.
In conclusion, he commented, "Our portfolio managers and analysts are visiting companies more than ever. From experience we know that such situations create very interesting opportunities for dedicated investors. For example, we have noticed investors moving away from blue-chips towards mid-cap and smaller stocks, creating the perfect environment for active stock picking."
See all the topics and watch the programme at:
Today we’re broadcasting Live Q&A to answer questions from investors watching from around the world.
Marcus and I just saw some of the pre-posted questions and many of them concern the market rally that we experienced in 2009 and whether the Eastern European markets are looking set to repeat a relatively strong performance. The questions also relate to potential risks and to our general outlook for 2010 and what it means for our positioning.
Marcus and I are looking forward to communicate with investors over live web TV today at 11:00 CET.
See you then!
Judging from the Euromoney Central and Eastern European Forum in Vienna – one of the biggest annual gatherings of bankers and investors in the region – the main concern has shifted from the temporary refinancing issues in Eastern Europe to the structural debt problems in Southern Europe.
Analysts, investors and central bankers reminded each other of the remaining challenges in the financial and economic system in Eastern Europe but it was the large debt and fiscal problems in Greece that was mentioned as the number one concern in almost every panel regardless of topic.
On a more positive note, investors in Eastern Europe are clearly more upbeat about the prospects in the region after the strong gains in 2009 and the fact that most economies are recovering faster than previously expected. The panel on Russia, which I participated in, was very well attended and illustrated the cautious optimism about Eastern Europe that characterized the entire conference. One speaker argued that the previously so prevailing pessimism was overdone and it is comforting to note that it has not (yet) been replaced by investor exuberance and policy-making complacency but rather a sober attitude to the prospects and risks in Eastern Europe.
On our East Capital Live Q&A on Monday Peter Elam Håkansson and Marcus Svedberg will be answering questions live from investors from around the world.
Many of the questions received so far concern the market rally that we experienced last year and the potential risks and opportunities in this new year. What is the market sentiment and what regions and sectors are looking more positive than others going ahead? Peter and Marcus will share their insights from being active in Eastern Europe and respond to questions coming in live.
Read more about East Capital Live Q&A
The previous web TV broadcast in November was watched by over a thousand investors from 19 countries.
See you on Monday at 11:00 CET!
Ps. The programme will also be available to watch on demand
Last week we set a five-year funding agreement to co-sponsor SITE (Stockholm Institute of Transition Economics), the leading research and policy centre on transition in Central and Eastern Europe.
The centre works with governments in the region to formulate policy options, monitor implementation of reforms, and evaluate outcomes to help decision-makers find innovative solutions to policy problems.
It is an honour to fund these important efforts together with dedicated sponsors such as Tetra Laval, the Swedish Ministry for Foreign Affairs, Axel Johnson Holding, Carl Bennett, Nordea, SEB and Handelsbanken.
We will follow closely SITE’s dedicated work which clearly benefits the region and goes very well in line with our vision; to truly release the potential of the East Capital Universe, which today spans 29 countries.
This blog aims to share our experience of investing in Eastern Europe in an informative and insightful manner by offering news, reflections, comments, reports and Q&A’s with our fund managers and analysts.
A long-term perspective and local presence are key to East Capital’s investment philosophy. Making 1,000 company visits/ year in the region teach us more about the markets than all indices ever could.
Our contributors include: Peter Elam Håkansson, Founder, Chairman and Head of the Investment team; Karine Hirn, Founding partner and CEO of East Capital AB; Marcus Svedberg, Chief Economist and Head of Communications, Vesna Lucca.
Read more under About this blog.
Långsiktighet och lokal närvaro är grunden för East Capitals investeringsfilosofi. I den här bloggen vill vi dela med oss av aktuella insikter från Östeuropa & Kina och dess investeringsklimat. Engelska är gemensamt för de flesta av våra investerare och är därför det främsta språket för blogginläggen.
BloggpolicyEast Capitals blogg är avsedd som en kontaktyta mellan webbplatsens besökare och företrädare för East Capital. Det är viktigt att uppmärksamma att uttalanden som görs av företrädarna för East Capital inte nödvändigtvis utgör East Capitals officiella ståndpunkt. Under inga omständigheter ska uttalanden på bloggen uppfattas som investeringsrådgivning och East Capital är inte ansvarigt för någon skada eller förlust som någon av webbplatsens besökare eller annan orsakas genom att förlita sig på uttalanden på bloggen.
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Partner och Chief Representative, Shanghai-kontoret. Karine bloggar om East Capital, våra fondprodukter och ger direktrapporter från Shanghai.
East Capitals chefekonom fokuserar på makroekonomi, analyser och omvärldshändelser som påverkar utvecklingen i regionen.
Kristina, makroekonom Asien, delar med sig av sina erfarenheter och analyserar trender och händelser som påverkar Kina.
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