EUROPE - Countries such as Poland, Hungary and the Czech Republic are set to sprout attractive investment opportunities from likely EU accession in 2004.
Other emerging European countries such as Russia also have strong prospects for long-term capital growth, according to Baring Asset Management.
Klaus Bockstaller, fund manager at BAM, said: “Following October lows, European emerging markets rallied in the fourth quarter of 12002 as global sentiment improved based on the abatement of negative news on corporate governance, cheap valuations and the fact that markets had been largely oversold.
“The major theme for emerging Europe in the last quarter was the completion of EU accession negotiations which culminated in the the successful conclusion of the Copenhagen Summit. We expect this to impact positively on the region throughout 2003 and beyond.”
BAM predicts that Poland, the Czech Republic and Hungary will benefit economically from these EU enlargement negotiations which will be decided by a referendum for Hungary in April. There are also potential referenda for the Czech Republic and Poland in June.
Russia’s outlook is positive despite recent underperformance due to a lack of positive triggers rather than worsening fundamentals. A healthy current account balance and budget surpluses support confidence in this region.
Bockstaller added: “At sector level, Financials continue their strong run driven by expectations that traditional banking activities should benefit from European convergence.
“Russian oil companies remain very cheap and the sector is well supported by the fact that BP took a 50% [stake] in TNK... .”
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