Emerging European nations are over the economic crisis hurdle, say analysts. The region’s finances and ETF are both looking much better after some substantial aid from the IMF and European Union. Now what?
The IMF, European Union and Central Banks all helped in reducing Central and Eastern Europe’s liquidity issues, which stymied multiple national bankruptcy, cross-border banking collapse and region-wide contagion, writes Michael Winfrey for Reuters.
Investors are beginning to peruse the various countries, looking for new positions to take advantage of potentially good performers. However, there are still some risks:
- Latvia, Romania and Hungary are still discussing the finer details of their billion-euro rescue packages
- States that avoided bailouts are dealing with over-sized deficits, which could result in spending cuts and diminish future growth
- Unemployment can continue to rise for another year or more
- A fourth-quarter selloff in the U.S. stock markets could create another round of flight from risk around the globe
Many believe prospects for economic growth in emerging markets are better than those in the United States, but an investor should be aware that economic situations vary from country to country, remarks Sam Subramanian for iStockAnalyst.
A good way to hedge these risks is with an ETF that offers broad exposure to a range of countries. Instead of betting on individual countries, ETFs can help spread out the exposure a little more and reduce volatility and risk. Watch the trend lines in order to spot opportunities.
- SPDR S&P Emerging Europe (GUR): up 46.3% year-to-date
Max Chen contributed to this article.