Following Russia's invasion of Ukraine in the early months of 2022, and the subsequent sanctions imposed by the U.S., some investors were forced to liquidate their Russian investments. Many investors, uncertain about the potential scope of the coming war, also took the opportunity to liquidate their investments in all of Eastern Europe.
More than two years later, the Russia-Ukraine war still wages on, and while uncertainty in the region continues, it may be time for investors to reconsider investments in other countries in the region. Over the last 12 months (ending May 2024), indices focused on Poland, Hungary and the Czech Republic have done remarkably well relative to the full basket of emerging markets, with Poland increasing more than 50%.
These countries may still have growth potential. According to Research Affiliates models, all three have double-digit expected returns over the coming decade, outpacing the global set of emerging markets. In addition, a closer look into Poland, the largest of the three, reveals additional reasons for optimism.
