Poland ETFs Benefit From Debt Crisis

Includes: EPOL, PLND
by: Tom Lydon

If you want to play the eurozone economy, but you don’t want any of that pesky debt crisis dragging your funds down, then you’d do well to consider Poland exchange traded funds (ETFs).

While broad Europe ETFs have gained about 12% in the last six months, ETFs like iShares MSCI Poland Investable Mkt Index (NYSEARCA:EPOL) and Market Vectors Poland ETF (NYSEARCA:PLND) have gained about 26% in the same time frame.

It begs the question: why wait on a eurozone recovery when you can play an economy that’s already there?

  • Deputy Finance Minister Dominik Radziwill recently stated that “eurozone problems have made [Poland] looking more like a safe haven as the whole [risk] perception has changed dramatically” and that having a free-floating currency also helped the country weather the recent economic turmoil, reports Leos Rousek for The Wall Street Journal.
  • Poland will likely maintain its sustainable growth projections, adds Radziwill. The World Bank estimates that Poland will expand 4.1% this year and grow 4.5% next year as private consumption increases along with rising export levels.
  • According to the World Bank, Poland and other developing countries accounted for about half the global growth in our post-recession environment, writes Remi Adekoya for Warsaw Business Journal.

A cooling could be coming soon, though. A majority of analysts believe that Poland’s Central Bank will increase rates by a quarter point from its historic low of 3.5%, says Jan Cienski for The Financial Times. The economy’s strong growth, along with the bank’s record low rates, is fueling inflation, which hit 3.1% in December, or a 11-month high. Additionally, the rate hike should provide a boost to the relatively weak zloty currency.

Disclosure: No positions