Investment management firm U.S. Global Investors (USGI) reported
in August that
the stocks in emerging European countries have
so far this year.
[caption id="attachment_63774" align="alignright" width="300"
caption="Time to buy in Turkey"]
Moreover, although the region's shares have lagged U.S. stocks,
they have significantly outpaced stocks in developed European
While the SPDR S&P 500 Index ETF Trust (
) was up about 12% year-to-date through August and
the Vanguard MSCI Europe ETF (
) gained approximately 6% (in the chart below, SPY is red and VGK
is green), some emerging European countries provided returns
comfortably in the high single digits - and at least one country
has significantly outperformed both indexes.
Among the best-performing emerging European countries is Poland.
The homeland to my patriarchal ancestors, as represented by
the iShares MSCI Poland Investable Market Index Fund ETF (
), was up about 9% so far in 2012.
RSX, the Market Vectors Russia ETF Trust (
) had advanced by about 2% for the year by the end of August,
lagging both SPY and VGK, so the good news is not
But the best news out of emerging European countries this year
has come from Turkey, a country that uniquely is alternately deemed
Eastern European, Western Asian or, often, Eurasian. U.S. Global
Investors considers it Eastern European, so I do too.
The iShares MSCI Turkey Investable Market Index Fund
) was up some 35% year-to-date through August.
The U.S. Global Investors report cites a number of reasons
to expect Eastern Europe as a whole to perform better
than developed Europe and the U.S. in the future. For example, USGI
estimates that these emerging European countries will enjoy
superior gross domestic product growth: 4% for Russia and Turkey,
and 2% to 3% for Poland.
The report also suggests that stocks in these countries are
undervalued and have attractive dividend yields. These two measures
alone could further arouse the interest (and investment dollars) of
investors looking for emerging stocks with growth potential and
higher yields than are available in the U.S. or developed
The problems in the euro zone don't seem likely to abate very
soon. Future growth in the U.S. is suspect,
and consensus estimates still project GDP to be about
1.5%. Despite SPY's outperforming VGK on a year-to-date basis,
future growth is likely to be superior in VGK.
And for a country like Turkey, which straddles two continents
and therefore has a distinct geographic advantage contributing to
its growth, the future is certainly promising. It is
reasonable to expect superior growth in emerging European countries