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Investing in Central and Eastern Europe Via US-Listed ETFS NBP/INE PAN/GIC Roundtable Cracow, Poland, May 26, 2012 Bill Witherell Cumberland Advisors

ŠCopyright 2012 Cumberland AdvisorsŽ. Further distribution prohibited without prior permission.


Economic Outlook – Real GNP (% PA)

2011

2012

2013

Poland

4.3

2.6

3.0

Hungary

1.7

-0.4

1.8

Czech Republic

1.7

0.4

2.3

Russia

4.3

4.0

4.5

1.5

-0.3

0.8

In comparison with EU

Source: Cumberland Advisors

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


Some Recent Developments • Polish MPC, despite signs of a weaker economy, surprises with a 25bp increase in policy rates, noting impatience with high inflation. Deposit rate: 3.25%, Base rate: 4.75,Lending rate: 6.25% • Russian CBR remained on hold. Refinancing rate:8.0, Overnight deposit rate: 4.0% • Manufacturing PMI’s weaken n April for Poland, Czech Republic and Hungary. Poland’s manufacturing responded to the shock of Eurozone’s weakening with a greater delay than did Hungary and the Czech Republic, and could contract in Q2.

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


Stock Market Capitalization US$ millions, end 2011 (Jan. 2012 for Russia) Warsaw Stock Exchange

138,244

Prague Stock Exchange

53,198

Budapest Stock Exchange

18,773

Russia (MICEX-RTS)

877,190

Source: World Federation of Exchanges and PSE

ŠCopyright 2012 Cumberland AdvisorsŽ. Further distribution prohibited without prior permission.


US-Listed ETFs for Central and Eastern Europe

Ticker

Net Assets –US$M

SPDR S&P Emerging Europe

GUR

102

iShares MSCI Emerging Markets Eastern Europe

ESR

28

iShares MSCI Poland Investible Market

EPOL

128

Market Vectors Poland

PLND

33

Market Vectors Russia

RSX

2,100

ERUS

113

SPDR S&P Russia

RBL

59

Market Vectors Russia Small Cap

RSXJ

5

iShares MSCI Russia Capped

Source: Yahoo Finance

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


Eastern Europe ETF – GUR – Compared with All World EX US ETF – ACWX (YTD May 14)

ACWX= 3.48% GUR= 5.89%

Sources: Yahoo Finance and Ned Davis

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


GUR Country Weights (%)

• • • • • • • •

Russia: 60.68 Turkey: 16.25 Poland: 13.56 Czech Republic: 4.03 Hungary: 3.70 Jersey: 0.73 United Kingdom: 0.72 Kazakhstan:0.32

Source: State Street Global Advisors

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GUR Sector Weights (%) • • • • • • • • • •

Energy: 38.91 Financials: 22.60 Telecommunication Services: 11.59 Materials: 11.26 Utilities: 3.57 Consumer Staples:3.37 Consumer Discretionary: 3.07 Industrials: 2.62 Health Care: 1.11 Information Technology: 0.34

Source: State Street Global Advisors

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


Polish ETF – EPOL - Compared with Eastern Europe – GUR (YTD May14) EPOL= 6.98% GUR= 5.89%

Sources: Yahoo Finance and Ned Davis

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


EPOL Sector Weights (%) • • • • • • • • • •

Financials: 39.23 Materials: 17.75 Energy: 13.06 Utilities: 11.79 Telecommunication Services: 6.10 Consumer Discretionary: 3.42 Consumer Staples: 3.35 Industrials: 2.95 Information Technology:1.89 Health Care: 0.42

Source: iShares

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


Russian ETFs – RSX and ERUS – Compared Eastern Europe – GUR (YTD May 14) RSX= 1.3% ERUS=5.07% GUR= 5.89%

Sources: Yahoo Finance and Ned Davis

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.


• • • • • • • • • •

Energy Financials Materials Telecommunications Utilities Consumer Staples Information Technology Industrials Health Care Consumer Discretionary

Sources: iShares and Market Vectors

ERUS 53.87 14.92 12.18 7.74 5.78 3.70 ,, ,, ,, ,,

RSX 42.1 11.7 20.0 10.5 7.2 5.3 1.3 0.8 0.7 0.4

©Copyright 2012 Cumberland Advisors®. Further distribution prohibited without prior permission.

Investing in Central and Eastern Europe Via US-Listed ETFs  

Bill Witherell's presentation at the "Economies of Baltic Seas: A Sustainable Recovery?" Roundtable in Krakow, Poland May 26, 2012

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