Special Focus: Eastern Europe - Finding hidden opportunites.

(From European Pensions & Investments News)

Byline: Hugo Greenhalgh

Unfortunately for investors into eastern Europe, last year was the year to be invested. Driven by accession to the European Union, markets rocketed by as much as 110 per cent in the case of Slovakia (see table). Investors rushed to exploit convergence plays, and local currencies appreciated on the back of massive capital inflows of Western cash.

However, last year's party has resulted in much flat fizz for 2005. "There is not much more room for multiple [-digit] expansion," says Agne Zitkute, an investment manager at Pictet Asset Management. "All we are hoping for is earnings growth to drive performance."

Ms Zitkute says that there are not many opportunities left in either Hungary or the Czech Republic: "There are no major undervaluation stories left in those markets. It is nowhere near as exciting as last year."

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