EE/FSU: Equity market performance in Q1
Overview:
Equity indices in the Eastern Europe (EE) and Former Soviet Union (FSU) region on average posted their third positive quarterly return in a row in Q1 2011. The various sub-regions within EE/FSU continue to be highly correlated. The indices in SEE (EU) and SEE (non-EU) outperformed FSU and CEE in Q1. However, this should be viewed alongside their significant under-performance relative to those two sub-regions since the end of 2007. This may be explained by CEE’s strong manufacturing links to the EU and the net energy exporting status of most of the FSU countries we track. By contrast, SEE (non-EU) largely consists of what is often referred to as frontier emerging markets – the last to benefit typically from the return of capital inflows to emerging markets given their less solid economic fundamentals.