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A surge in portfolio inflows is flooding into emerging central Europe, although yield-hungry investors are picking solid policy and higher growth over countries still struggling to put the crisis behind them.
After deep contractions across the region, a two-speed recovery is underway, with countries boasting better debt fundamentals like Poland and the Czech Republic for the moment ahead of those who depend on foreign lending.
Investors are also dipping into countries like Hungary, but struggles by the new centre-right Fidesz government to get its budget deficit under control mean it is lagging for now, along with fellow International Monetary Fund benefactor Romania.
“There has… been clear differentiation between the more robust and the weaker economies of the region,” Goldman Sachs wrote in a research note on the region.
from LEGACY Reuters Summits:
Analysts say the worst of the financial crisis that hit Eastern Europe especially hard has passed but new euro bond and sovereign bond issues could make it challenging for corporations looking to tap the capital markets. Cheuvreux's Simon Quijano-Evans explains why.