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This interest was certainly triggered by the IPO earlier this year in Hong Kong of Russia’s RUSAL, the world’s largest aluminum producer and the first ever Russian company to go public in Hong Kong. As such the IPO itself was eventful because of concerns about the company’s large debt burden and the unprecedented moves by the local regulator to prevent retail investors from participating in the offering. But many also interpreted it as a sign that Hong Kong was eventually succeeding in attracting companies from outside Greater China to its main list.

View of Hong Kong Island from the Star Ferry

Since then there have been many rumors about other Russian companies on their way to get a listing in Hong Kong. According to Chinese media, Shanghai’s international board has also received some interest from Russian companies. Currently however no specific plans have been announced.

In the meantime we obviously think it is positive to see a surge in Asian investors’ awareness about investment opportunities in Eastern Europe, Russia and neighbouring countries. I was interviewed by CNBC on the subject of investing in Eastern Europe.

"The fact that today's Chinese leadership is dominated by people with a strong interest in technology - with President Hu Jintao and seven out of nine members of the Politburo's standing committee having an engineering background - might be part of the explanation why China has been so successful in transforming itself from a low-tech manufacturing nation based on low cost labour to a country today competing head to head in high technology" said Gustav Rhenman.

However, moving up the value chain might entail that China’s giant surpluses are likely to become even larger. Between 2004 and 2009 the Chinese trade surplus has risen from USD32 to 250 billion, and currency reserves are today the world's largest amounting to USD2.45 trillion. Gustav Rhenman singled out the growing imbalance coming from the increasing dependency of the US on China as a significant geopolitical risk that could affect investor sentiment globally. "Still, China has so far been successful in  handling these tensions and I see no reason to believe this would change in the coming years."

Commenting on concerns regarding a possible slowdown in Chinese growth - which he considers being overstated - he said "short term set-backs would not undermine the compelling investment case and the long term growth potential of China, which is supported by a massive urbanisation trend and a population becoming wealthier and eventually spending more".

Turning to valuations Gustav Rhenman commented that investors should be reconsidering which valuation metrics to use for a market such as the Chinese one with much higher growth prospects than in the developed world. At the same time he stressed that an active stock-picking approach and many company visits within China enable him to find stocks with attractive valuations and an excellent risk-reward ratio. "That is one of the reasons I am very pleased to join forces with East Capital as I will have more time and resources to dedicate to this work".

The macro picture, which was blighted by the 15% contraction in GDP in 2009, is so much better that the country is now expected to post about 6% growth this year. The crisis has meant the current account deficit has almost been eliminated, while inflation will come in at less than 1% this year. 

The newfound stability in the political sphere since President Viktor Yanukovych assumed the presidency at the start of this year means an ambitious reform programme has been launched, but are the aims achievable? 

The first big test was the conclusion of a new agreement with the IMF on June 3, which is for $15bn for 2 ½ years, essentially giving the country $1.5bn per quarter. Importantly, this money won't be used to finance external deficits, but to help bring the budget deficit of 6.5% this year down to 3.5% next year and for the reform effort. 

A central part of the reform programme is to raise gas prices, which hitherto have been heavily subsidised and were a huge drag on the economy. They were raised 50% from August 1 and will be hiked another 50% from April 1. 

Other measures are a bank recapitalisation worth $5bn, far-reaching deregulation for business, which is especially crucial for the SME segment that suffers from a stifling bureaucracy. "It's quite substantial reform measures being undertaken in Ukraine, it's a strong agenda through problem area still exist," says Aslund. 

For one thing, the country needs more reform of the pension system, the expenditures for which stand at 18% of GDP, the highest in world. Ukraine has promised to cut this to 12% of GDP by 2014, but more needs to be done. There are no serious measures against corruption, and the privatisation programme promised will almost certainly see the assets go to favoured local businessmen. "It's no secret who will get what, it's not a question of open tenders," he said. "The oligarchs restored! The people who run Ukraine are those who own Ukraine."

"The overall development is higher than elsewhere in Eastern Europe, but there's still catch-up potential, as they are still below the EU15 average in terms of GDP/capita," said Szalkai, adding that these countries are not just looking to achieve the EU average but to achieve the level of their neighbours like Germany and Austria.

As such, strong foreign investment inflows are expected to continue. Wage levels are still significantly lower. German labour costs work out at €29.8 per hour, but that level is only €6.4 in Czech Republic and €4.1 in Slovakia. "There's a very large difference in labour costs so we will still see continued inflows," he said. 

Other attractive aspects are the favourable taxation – Czech and Slovaks have flat tax rates, so will Hungary from next year – the improving infrastructure and strong EU anchor means the investment environment is safe. 

Finally, there is still a lot of EU money flowing in to help these countries develop. Between 2007 and 2013, the EU has mandated that 20% of these countries' annual GDP will come in as EU funds.

Central European markets are the highest valued markets in the East Capital’s investment universe – Czech Republic market trades at 12.2x price/earnings, Poland at 12.4x, Hungary about 11x compared with Russia on about 7x. But the stock-picking asset manager still finds some companies with attractive valuations and a positive outlook, many of these in the small to mid-cap universe, to which the asset manager's Bering New Europe fund is dedicated.