It has not been an easy time for the developed markets in the past couple of years, and especially not in the last couple of weeks following the fallout from WorldCom. But while the mainstream markets have been suffering, emerging and eastern Europe have surged ahead, with Russia in the vanguard. The S&P/IFCI East Europe index has risen by over 55% in dollar terms over the year to May, according to the latest figures from Standard&Poor's. The S&P/IFCI Emerging Europe index rose by 26% in that time.
Not surprisingly as they chase returns to try to recover some of the poor performance in the developed markets, fund managers have been stepping up their involvement in central and eastern Europe. Several European players including Allianz, BNP Paribas, Raiffeisen and SEB have been launching new funds to cover the markets. Other investment houses have increased exposure through their existing funds and have focused on those countries that are most likely to join the EU next.
