The stockmarkets of Eastern Europe remained weak in January, with some particularly sharp falls in Hungary, Poland and peripheral markets such as Romania, with local currencies coming under significant downward pressure as investors focussed on their relatively poor financial position. Russian share prices also continued to fall, not helped by a further 15% fall for the rouble against the US dollar, even though Russia remains financially sound even after expending some foreign exchange reserves to support the rouble and with oil at around USD 40 per barrel.
There were however a number of interesting corporate developments, especially in Russia, which suggested that some investors at least were now of the opinion that with share prices already at distressed levels, significant value could be found in the market. Given the Magna Eastern European Fund’s focus on fundamental company-specific developments, this trend is to be welcomed and contributed to the significant outperformance recorded by the Fund over the month. The value of the Fund nevertheless still fell by 3.9% in January.
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