Here at
East Capital, we usually refer to southeastern Europe as the last serious convergence case. This region includes the western Balkans, but also existing EU members Romania and Bulgaria, and EU candidate, Turkey. When we say “convergence case,” we mean countries that stand to gain economically from the process of entering EU, due to the reforms and investments this will bring. And we can add to that the fact that the initial years of membership usually provide a strong financial impetus. History has given us several examples of this, primarily Spain, Ireland and the Eastern European countries that joined in 2004.
We remain hopeful however, for a positive development for this region. And the best exposure to this region is to be found in our Balkan fund and our special product, Bering Balkan. Another reason for investments with a long-term perspective in these funds is the fact that these markets have not recovered from the crisis in line with the rest of the world (see the table below, showing stock market developments), and that they also have low valuations.
Turkey Slovenia Austria Croatia Greece Serbia Romania Bulgaria
YTD 91% 10% 41% 15% 24% 13% 60% 18%
From 2009 Low 123% 19% 75% 57% 51% 81% 146% 63%
From Peak -12% -67% -50% -63% -62% -81% -57% -78%
.