Erste Group Reports On CEE Equity Markets

Erste Group analysts see a slow down of the speed of improvement on the CEE equity markets, but not alarming, since the base effect is fading out and the current expectations are developing in an acceptable way. While inflation does

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Erste Group analysts see a slow-down of the speed of improvement on the CEE equity markets, but not alarming, since the base effect is fading out and the current expectations are developing in an acceptable way. While inflation does not seem to be a pressing issue, expectations on inflation continue to rise. The imminent risk of rate hikes should also remain part of expectations for the coming quarters. In any case, sentiment combined with strong liquidity should continue to help markets deliver a strong showing in 1Q10.

Outlook

“Economically, CEE markets will remain split into two parts. Those markets that found the bottom earlier – like Czech Republic or Slovakia – should be able to report better growth for 2010. Romania or Hungary as markets lagging behind in bottoming will also lag in terms of growth”, says Henning Ekuchen, Co-Head of CEE Equity Research and author of the report. “While growth will remain below-potential across the region, we nevertheless expect CEE to post better numbers than the Eurozone throughout 2010”, Ekuchen added.

Country allocation

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Romania clearly shows the highest upside potential, since the market is still confronted with a high risk aversion.*

Russia is a potential top performer that shows a very reliable regression outcome.*

Austria, Czech Republic, Turkey, Poland and Croatia are all seen as potentially offering upsides of between 20% and 30%.*

Hungary is ranging at the bottom of Erste Group’s potential upside comparison.

To view the full report, please click here.

D.C.

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