Emerging Europe is Best of Both Worlds

Russian stocks are undervalued and the Hungarian banking sector is the model of recovery; why Europe is the emerging market investors should be backing

Emma Wall 2 June, 2014 | 4:06PM
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There are reasons why the Russian stock market should be cheap; the current tug-of-war for Ukraine for example. But Blackrock Emerging Europe (BEEP) manager David Reid says that it Russian equities should not be this cheap.

“The risk perception of Russian stocks is not accurate,” he said. “The pessimism surrounding Eastern Europe is very high. It has been an unfashionable region for some time, but it wasn’t that long ago that it was trading at a premium. It is trading at a discount now, but that is closing.”

Reid says that Russian stocks are cheap both on a relative and historical basis, but there have been significant changes in the region that make it more attractive to investors.

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Emma Wall  is former Senior International Editor for Morningstar

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