|
Eastern European stocks, such as PKN Orlen SA and OTP Bank Rt., have been outperforming the Dow Jones Stoxx 50 Index since 10 countries in the region joined the European Union six months ago, thanks to the significant prospects being enjoyed by the companies of the new central and eastern European states.
Maltese stocks have also gained good ground since accession, with the Malta Stock Exchange share index rising 13.8 per cent since EU accession.
The Central European Blue Chip Index rose 19 per cent to a record since the EU expanded on 1 May. 19 of the index's 20 members are based in the Czech Republic, Hungary, Poland or Slovenia, among the new members. The Stoxx 50 fell 0.6 per cent in the period.
Last week, the Central European index rose 1.4 per cent, beating the Stoxx 50's 0.1 per cent advance. The Stoxx 600 added 0.2 per cent and the Euro Stoxx 50, a gauge for the 12 countries sharing the euro, increased 0.8 per cent.
The Czech Republic's economy may expand 3.8 per cent this year and 3.6 per cent in 2005, according to the Finance Ministry. Hungary's government expects growth of about four per cent for this year and next.
Poland's economy, the biggest among the new EU members, will expand by 5.7 per cent in 2004 and by five per cent in 2005, according to a government forecast.
The pace in all three countries would surpass the European Commission's predicted growth for the EU of 2.1 per cent in 2004 and two per cent next year.
All 10 members' benchmark stock indexes, including Malta’s, rose in the past six months except Cyprus's, which fell 14 per cent. The Malta Stock Exchange Index has grown by 13.8 per cent since the end of April.
The Slovak Share Index led gains with a 48 per cent surge. Poland's WIG20 Index rose 3.6 per cent, the Czech PX-50 Index added 11 per cent and Hungary's BUX Index jumped 19 per cent.
PKN, Poland's largest oil company, added 27 per cent since 1 May. The refiner, based in Plock, on 13 August said its second-quarter net income climbed more than fourfold.
OTP's shares increased 25 per cent since 1 May. On 12 August, the company said earnings surged 44 per cent during the second quarter and boosted its full-year profit forecast.
Initial public offerings may help stoke investor interest in the region. Governments in the new EU countries are selling shares of state-owned companies to raise cash and cut budget deficits as they work to adopt the euro by 2010.
Shares of PKO Bank Polski SA, Poland's largest lender, will start trading on 10 November after the country's biggest IPO. The government plans to raise as much as EUR1.37 billion by selling about a third of the Warsaw-based company.
Some investors say it may be too late to benefit from Eastern European growth.
Still, stocks in the Central European index trade at an average of 12 times estimated profit for this year, according to data. The price-to-earnings ratio is less than the average of 16 for the Stoxx 50.
Wienerberger, the world's number one brick maker, advanced 14 per cent. The Vienna-based company last month bought Poland's Kombet Sp. z.o.o. to expand in the region.
Austria's ATX Index is Western Europe's second-best performing stock benchmark this year, surging 37 per cent. Only Iceland's ICEX 15 Index has a bigger gain. The ATX may increase 24 per cent in 2005, Jens Zimmermann, an analyst with Bank Austria Creditanstalt AG, said on 30 September.
|
