Investing in Central and Eastern Europe Via US-Listed ETFS NBP/INE PAN/GIC Roundtable Cracow, Poland, May 26, 2012 Bill Witherell Cumberland Advisors
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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
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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.
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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
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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
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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
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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
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Polish ETF – EPOL - Compared with Eastern Europe – GUR (YTD May14) EPOL= 6.98% GUR= 5.89%
Sources: Yahoo Finance and Ned Davis
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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
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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
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• • • • • • • • • •
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
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