- Patrick Young
- Downgrades Loom for Hungary, Poland, Bond Yields Show
- www.bloomberg.com
Summary
The Market has taken fright of the Eastern European marketplace and all assets, with little regard to their fundamentals, are collapsing… In other words, ladies and gentlemen, it’s a genuine triple A panic exodus.
Analysis
Reading emerging markets newswires is always an intriguing business. There are the code words – certain countries are always marked as toxic waste for whatever reason. In this case, it’s the idea that Serbia is some form of benchmark for disaster… In reality, there may be downgrades and there may be big issues but the market has lost sight of discerning what are the good and bad bits of the eastern European economy. In other words, this is a copybook market panic.
The emerging european marketplace has evolved in different ways and at different speeds. The laggards in economic reform such as Hungary are being punished while the Icarus syndrome is tearing through those who got closest to the sun and are now paying the price.
Similarly various key issues are being missed. Amidst all this flight from bond markets and the consequent rise in yields, nobody in the media seems to touch upon the fact that while the Zloty has collapsed (despite the economy being in reasonable shape – certainly compared to relative basket cases like Hungary) and a swathe of currency units are in freefall, whay are the Baltic currency pegs still intact?
Well, not for long I expect. At the same time, the mass dumping exercize right now is creating the most remarkable opportunities in the near future to invest in the good economies of Eastern Europe at fire sale rates.
The contagion is swiftly moving around the region and it is a bloody environment but at the same time, speaking directly from the frontline of emerging Europe, the opportunities have simply never been greater.
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