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Eurozone crisis bites CEE economies
25 November 2011
The eurozone debt crisis has infected asset values across emerging Europe. Alastair O’Dell investigates whether the region now represents an opportunity
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CEE
eurozone
The epic eurozone crisis has dominated the financial landscape for many months. The effect on bond yields and the banking sector within the currency union is obvious but the case for investment in non-eurozone countries to the east, both within and outside the EU, is more complicated.
Most obviously, the uncertainty has acted as a very real drag on growth throughout the region and increased risk. But the question is whether the fall in corporate and sovereign bond values, as well as other asset and currency values, is a reasonable response to the challenges – or whether technical factors have created a buying opportunity.
The prospects of countries across the CEE vary hugely, but movements in the credit default swap markets and the actions several banking groups have been indiscriminate. Since spring of 2011, CDS spreads have at least doubled for Romania, Poland, Croatia and Hungary.
Approximately 80% of the eastern...
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