Alroy Commentary - Emerging Europe is a refuge place
Driving by the Continent’s economic recovery, Eastern Europe markets was rising while other emerging market was hit. According to MSCI index, stock markets in Eastern Europe have risen by 12% in the past half year, compared with 1% up in emerging market overall.
Eastern Europe market will be boosted if Western Europe keeps the track of recovery. The Western Europe has returned to growth since debt crisis, and it would fuel demand for cars, appliances and other goods manufactured in Eastern Europe. Hungary reported a trade surplus of €3.68 billion ($4.92 billion) in the first half year, according to the country’s statistics agency. As countries such as Germany and France import more good, Eastern Europe countries’ trade balance will tilt further.
Obviously, if the Fed tightens monetary policy in the future, emerging economies may not be strong enough to keep growth. However, since Europe economies were not big beneficiaries of Fed’s monetary policy, they would be hit less hard, compared other emerging market.
In past few months, Emerging Europe played an important role as refuge harbor in emerging market. We regard the markets will keep the role in the fourth quarter.
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