Nascent recovery in Europe benefiting Eastern European equities

Eastern European companies can expect to benefit from the nascent recovery now evident in the more developed European economies following the financial crisis that hit southern Europe particularly hard – that is the assessment of portfolio advisor Ole Gotthardt, who advises the Eastern Europe Class A fund.

“The countries of Eastern Europe are benefiting from the nascent recovery in Europe – not least because the bulk of these nations’ exports are sent to Europe and particularly to Germany. Growth in the region is picking up, and we expect that domestic consumption and investment, together with exports, will contribute to a somewhat higher rate of economic growth in 2014 and 2015 compared with this year,” says Ole Gotthardt, who also points out that Eastern European equities are relatively cheap.

Valuations are lower
“It is a positive for the Eastern European equity markets that valuations are lower than in the emerging markets generally,” explains Ole Gotthardt.

Ole Gotthardt and his team at Danske Capital are also advisors for a similar fund in the Danish market, the Eastern Europe fund, which follows the same investment strategy. The Danish fund has just been awarded five stars – the top rating – by Morningstar, putting the fund in the top 10% in its category.

“The strategy for the fund is to select companies in the region based on fundamental analysis. In other words, the companies’ specific business development, their quality relative to, for example, market position, management, valuation, etc.,” explains chief portfolio advisor Ole Gotthardt.