This chart is of the SOFIX index in Bulgaria. I tried to get a chart from Romania but I could not find one on BigCharts and the chart at the Bucharest Exchange site only gave a one day chart.
Below the SOFIX chart is a one year chart for NBG. Eyeballing the chart is the only means at my disposal to begin to try to assess this. Clearly the charts do not look similar.
This does not mean that NBG can't benefit from lending to these countries which was the foundation for past posts I wrote about Austria. I don't know how much business NBG gets from Bulgaria, Romania and the others but if it does business in these places it will capture some benefit but I don't have enough information to say it is capturing the effect.Hypothetically if a Greek bank derived half of its revenue from Serbia and Romania but the correlation of the share price to those indices was only 0.5, are you capturing the effect? This is debatable.
Another reader notes that emerging markets look cheap compared to the US and developed markets. Careful with that one. Emerging market PE ratios are usually much cheaper than in the US. According to Altavista Research the PE for EEM is 14. That is not cheap for emerging markets. I would say ten times earnings is closer to normal.
8 comments:
Thanks for the great follow up.
Until I can get more directly invested into the Balkans- either through an ETF or some other banks shares;
I will be content with a sliver
of their revenues coming from the rest of SE Europe.
Thanks,
Best Regards,
HLP,Jr
If I was to bet on one emerging country in Europe next year, it would be Croatia.
I am looking at ways to enter their growth story, short of buying land (I was offered land in Zumberak last year with a Croatian sponser to develop organic vegetables and lugumes, which I declined. I now regret passing on it.).
Western Europe chose Croatia as a popular tourist destination this past summer.The coastal areas are nothing short of spectacular.
The population is well educated and industrious.
And their slivovice,taken by world leaders at full strength,will solve all our planet's diplomatic problems.
you are spot on about Croatia's scenery.
part of the 76 cents yield they are posting came from the proceeds from the sale of a 2 for 5 rights offering. The proceeds from the sale were 52 cents (gross) vs the regular cash dividend of 25 cents. I wouldn't expect the rights on it to occur again, so the indicated yield is closer to 2.7%.
great info on the div.
about 3% seems closer to what I remember. thank you again.
You may find this Spiegel article on Romania interesting:
http://www.spiegel.de/international/0,1518,416297,00.html
I am a little confused. why would p/e ratios be low. I am qualifying 10-14 as low for anything with any potential for growth or that is just developing. I understand there is perhaps more risk for an American to dabbel in a less than fully developed / stable economy, but with said why wouldnt all the dollars start pooring out of America. When I search the US exchanges for stocks that trade at about that valuation i just find slow moving and concequently dieing monsters for companies. Are the companies balance sheets structured differently or do they run on differnet debt to equity ratios than American companies or perhaps they are leveraged differently?
Roger,
A little over 30% of NBGs income comes from outside Greece. What they call income I'd call revenue. Page 100 of their 2005 annual report.
http://www.nbg.gr/en/pdf/AnnualReport2005_ENG.pdf
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