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6 facts tell me to bet on Eastern Europe stocks (or ETFs…) April 16, 2007

Posted by deminvest in etf, European Stocks, funds, growth stock, investment, investment strategies, LYCE.FRA Eastern Europe-LX ETF, stocks.
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Let’s look at a few facts:

1) Western European Economy is finally taking off.

2) Germany is the locomotive of European growth.

3) Euro currency is at very high level.

4) European Community is enlarging itself eastward.

5) Russia is the largest and richest of commodities country in the World.

6) Eastern Europe still has a very cheap workforce.

Map of Eastern Europe

Looking at those facts and at this map , I have decided to invest in Eastern Europe: Germany has borders with the Czech Republic and Poland and is only a few hours of truck away from other Eastern European countries.

I have little doubt taht in a short timespan Eastern Europe will reach Western European wealth standards, just like Italy, Ireland and Spain have, in few years, reached similar wealth levels of Germany England and France. There was a time when Irish or Italian citizens had to emigrate. Now both countries attract immigrants.

Unfortunately Eastern European stocks are not as “fashionable” as Indian and Chinese stocks. So they are not traded on Wall Street and it is not easy to buy them directly. So I have to give up my general rule not to pay useless commissions and I have to chose a good ETF to buy Eastern Europe stock:

I chose Eastern Europe-LX (LYCE.FRA) traded on the Xetra market. This ETF has 0.5% yearly commissions (vampires!), it mainly has stocks from Hungary, Czech Republic and Poland.

It has:

Dividend yield: 2.592
Price/Earnings: 16.53

If you understand strange languages, you’ll maybe like to know that LYCE’s first 10 holdings are:

Telekomunikacja Polska 12.5
Cesky Telecom 5.7
Polski Koncern Naftowy ORLEN 10.2
Powszechna Kasa Oszczednosci Bk Polski 5.5
Bank Pekao 7.5
Bank Przemyslowo-Handlowy PBK 5.2
CEZ 7.2
OTP Bank 5.1
Erste Bank 7.2
Mol Magyar Olaj- Es Gazipari Rt. 4.9

I am not at all sure that I chose the best Eastern Europe ETF, what I liked about it is the fact that it does mainly invest in countries I trust and like very much.

Comments»

1. deminvest - April 16, 2007

I bought 38 LYCE at 26.1776 each, spending a total of EUR 994.75.

Let the force be with me, with LYCE and with those wonderful Easter European countries, which have suffered too much in the last 70 years and deserve to become confortably wealthy in a short time.

2. witek - June 14, 2007

LYCE has very good Eastern European holdings.

Eastern Europe’s economies and standard of living are growing. Currently Polish, Czech and Hungarian wages are 1/4 of Western European wages however in 10 years times they will catch up as will the Eastern European economies.

Be wise and keep these 38 LYCE shares for 30 years or until you retire.

3. deminvest - June 14, 2007

Witek, I think you’re totally right, they will catch up, hopefully in less than 10 years. Only we should also keep in mind that right now wages in China or India are as low as 1/100 of Western and they may catch up too. Also Google, Microsoft and Ebay are becoming part of everyday’s life of billions of people who are gaining purchasing power. Also those billions of people will want to travel just like we do… Will need cleaner energy… Will need commodities.

Eastern Europe is a great opportunity, but there also other huge opportunities in this World which is changing so fast… There are also risks of course!

4. Vlada Kynsky - September 13, 2007

at http://www.stockweb.blogspot.com you can find more Eastern European ETF traded also on US markets.

5. deminvest - September 14, 2007

Vlada,

your comment is very close to spam. I am sure that with your knowledge of Eastern Europe’s markets, you may have written something much more interesting.

I don’t cancel it because I see your Blog is brand new and you may be an inexperienced Blogger and also because I must admit that your (advertising packed) Blog contains useful information about Eastern Europe’s ETFs.

You also commented on the About page. I answered you there.

6. kelly - October 30, 2007

Can you tell me the full name and issuer of this ETF? I cant find it on the Bloomberg system

7. deminvest - October 30, 2007

Here is the link on Bloomberg for you Kelly:

http://www.bloomberg.com/apps/quote?ticker=LYCE:GR

full name is: Lyxor ETF Eastern Europe CECE EUR. It is traded on European stock markets.

If you only have access to US trading, you could give a look to SPDR S&P Emerging Europe ETF (GUR):
50% in energy and
25% in financial shares.
25% others
Invests in Cent Eastern European countries:
58% in Russia,
14% Poland,
12% Turkey,
8% Hungary,
3% Czech Republic.
Major holdings: Gazprom, Lukoil, Surgutneftegaz, MOL, OTP, CEZ.

8. Luboš Motl - April 26, 2008

This paragraph is written in April 2008 but if someone happens to read it already around July 2007, I recommend you to wait because between July 2007 and April 2008, the stocks in the region will drop by about 30 percent.

April 2008 could be a better time to invest.😉

9. GEORGES THOMAS - July 24, 2010

NEED STOCKS OF BEARING OF ALL NUMBERS


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