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Sven Kunsing Head of Eastern European Investment Management

Why invest in Eastern Europe ?. Sven Kunsing Head of Eastern European Investment Management. After all these years… Do we still find reasons to invest in Eastern Europe?.

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Sven Kunsing Head of Eastern European Investment Management

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  1. Why invest in Eastern Europe? Sven Kunsing Head of Eastern European Investment Management

  2. After all these years…Do we still find reasons to invest in Eastern Europe? SEB Growth Fund (Bloomberg: UHIKASV ET) is an Estonian domiciled Eastern European equity fund managed by SEB EE Equity Team

  3. Important starting point New Europe vs Russia (CIS) Convergence European Union policies Service oriented sectors Subcontracting Small economies Energy Other resources Heavy industries Emerging consumers Puzzling politics

  4. CompetitivenessHourly labour costs in industry and services Minimum, maximum and median levels in EUR Source: EuroStat

  5. CompetitivenessAverage weekly working hours +8.1% Source: EuroStat

  6. CompetitivenessTax competition (tax revenues as % of GDP) Source: EuroStat

  7. Result: Strong GDP growth Source: EcoWin, European Commission Spring 2007 Forecast, SEB Nordic Outlook August 2007

  8. Convergence5 year gov’t spreads to EUR

  9. ConvergenceFX rates in CEE3

  10. Bumpy road to Monetary Union *Referring to the period April 06 to March 07 Source: ECB Convergence report May 07 10

  11. Economic growthBack to the future – you have already seen this 25 years ago

  12. Why invest in Russia?

  13. Top 5 reasons • Emerging middle class • Strong natural resource base • Fast GDP growth • Imminent WTO accession • Ongoing economic reforms

  14. Russia: while huge, it’s still so small… Source: IMF WEO Database, April 2005

  15. Russia: … but catching up Source: IMF WEO Database, April 2005

  16. Strong GDP growth Source: EcoWin, SEB

  17. Russian growthNot so production-driven…

  18. Russia: Macroeconomic developments Macroeconomic success continues in 2007 • GDP growth +7.5% • Inflation 8.7% (second year in single digits) • Investment growth +17% • Real disposable income +14% • Trade surplus 115bn USD (9.4% of GDP) • Federal budget balance 4% of GDP • Early prepayment of Paris Club debt (now ext public debt/GDP ca 4%, one of lowest among all EM)

  19. Russia: strength all over Strong current account Strong fiscal balance Low public debt Strong reserves

  20. And after all these years…We still keep on beating the index SEB Growth Fund (Bloomberg: UHIKASV ET) is an Estonian domiciled Eastern European equity fund managed by SEB EE Equity Team

  21. Thank you! Sven Kunsing Head of Eastern European Investment Management sven.kunsing@seb.ee +372 6656 645

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