UK/EUROPE - The positive factors that have driven Eastern European markets over the last two years will most likely remain and spur investment in the region in the future, says Credit Suisse Asset Management (CSAM).
Co-managers for the European frontiers fund at CSAM, Neil Gregson (pictured) and Elizabeth Eaton, have voiced expectations that the region’s strong market performance in recent times will continue over the next six to 12 months.
Strong economic growth compared to both the global outlook and developed Europe were two of the driving factors mentioned in a CSAM release.
“Despite sound performance in 2003, regional valuations remain compelling and we expect the next leg of the rally to be driven by earnings growth,” the managers said in the release.
“Fund flows continue to strengthen across the region as foreign portfolio investors are attracted to higher interest rates and the convergence process. Domestic investors continue to diversify to equities.”
CSAM said investors continue to prefer Hungary to Poland in central Europe. The Polish economy seems to be in a slow recovery, while Hungarian stocks continue to trade at lower multiples and generally have excellent management track records, the company added.
Gregson and Eaton believe there is still value in the Russian market despite the recent turmoil in Yukos, with Russian assets looking “very compelling” from a valuation perspective, with the backing of a strong and rapidly growing economy.
CSAM is the institutional and mutual fund asset management arm of Credit Suisse First Boston, part of the £537bn Credit Suisse Group.
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