After stock prices dropped around the world in the last few weeks of 2018, due to the fears of a slowdown of the Chinese and world economies, the Prague Stock Exchange had a more successful outcome at the beginning of the new year. Also the indexes in Warsaw, Budapest and Bucharest are so far in the positive figures in 2019.
According to analysts, in spite of the strengthening at the beginning of the year, Central European stocks offer interesting investment opportunities for the future. “We continue to see very interesting growth potential in our region’s shares,” said Marco Marinucci, portfolio manager of Generali Investments CEE.
Also, Tomáš Pfeiler, portfolio manager of Cyrrus, positively assessed the situation. According to him, the Central European stock exchanges are currently a good opportunity for money appreciation even in comparison with more advanced Western European stock markets. “Local economies are currently growing faster. Even regional firms are in better shape, for example, they maintain a lower debt ratio,” said Pfeiler.
The potential can also be seen in the lower rate of the household debt ratio, which is likely to rise in the future as people get more credit, whether for housing or purchasing consumer goods.
Central European exchanges may, however, be affected by slowing economic growth, whether in the eurozone or other parts of the world. The risks also include the uncertainty surrounding Britain’s upcoming EU withdrawal and the possible continuation of the trade war between the United States and China. On the contrary, a positive impulse for Central European stock markets may be a change in the behavior of key central banks that can encourage investors.