Stocks in emerging markets, and especially emerging Europe equities, are in a good position to close the performance gap with those in developed markets, according to the third quarter outlook published by Erste Bank.
But three analysts published warnings about the asset class on Monday. While not calling for an abrupt end to the rises in emerging markets stocks and bonds witnessed over the past few months, the warnings serve as a reminder that volatility can come back at any time.
The reform process has been stalling in Central, Eastern and South-Eastern Europe and in the former Soviet countries even since before the crisis, and it has even reversed in some countries, the European Bank for Reconstruction and Development’s Transition Report 2013 shows.
The European Union, which for a long time has acted as a catalyst for reforms in emerging Europe and in the former Soviet Union, is now failing to fulfil that function, billionaire investor George Soros said on Wednesday.
The Asset Quality Review (AQR) that the European Central Bank (ECB) must carry out on banks in the eurozone as part of moves towards becoming the banking union’s single supervisor could increase the deleveraging already happening in Central, Eastern and Southeastern Europe, EBRD chief economist Erik Berglof told Marketmoving.info.
Subsidiaries of Western European banks present in Central, Eastern and South Eastern Europe (CESEE) reported an increase in demand for loans over the six months to October for the first time since the crisis started, a survey by the Vienna Initiative showed on Friday.