Equity capital markets: Equities to remain an attractive option
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CAPITAL MARKETS

Equity capital markets: Equities to remain an attractive option

The strategic investment case for emerging European equities remains solid despite the deterioration of global markets caused by liquidity constraints in the banking system, says Martin Majdaniuk, manager of Baring Emerging Europe, which has $850 million under management and has returned 195.6% over the past three years.

Martin Majdaniuk, Baring Emerging Europe

"The fact that 60% of the fund is invested in Russia is an indicator of how bullish we feel about the country and its relative isolation from global headwinds"
Martin Majdaniuk, Baring Emerging Europe

He claims that emerging Europe has sufficient internal momentum to generate good economic performance even if the US economy slows down. "The investment potential to be found in the emerging markets of eastern Europe has been attracting interest for several years. However, we still believe that the long-term prospects for these markets remain positive. Asian demand for rich natural resources, rapid infrastructure growth and an increase in domestic consumerism will contribute to the economic growth of the region, boosting the investment returns."

In particular, Majdaniuk believes that Russia remains an attractive investment option despite a lacklustre market performance in 2007. "Russia is known to be a rich supplier of oil and gas. However, it is also a significant supplier of industrial commodities such as nickel, copper, palladium and iron ore, all of which satisfy some of the Chinese commodity demand."

On the domestic demand front, Majdaniuk says Russian banks, utilities, mobile operators and steel stocks will all benefit from rising consumer spending and increasing expenditure on infrastructure respectively.

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