Emerging markets, why Eastern European stock markets are record-breakers
After a few difficult years for investors, Central Europe has been one of the best performers since January thanks to bank and consumer goods equities
Key points
The year 2025 was not bad at all for the emerging 'home' countries either. After a few difficult years for investors, Central Europe has put in one of the best performances since January: the Ntx index (which includes the region's main listings such as Poland, the Czech Republic and Hungary) has risen close to 30% in euro terms, compared to around 12% for the EuroStoxx 50.
The Whys of Growth
.Among the driving factors is the prospect of a possible peace in Ukraine, brokered by US President Donald Trump, which is also expected to bring significant benefits to neighbouring countries through reconstruction opportunities. However, it is interesting to note that the failure to reach an agreement has so far not significantly affected the strength of the regional performance.
Another driving factor is the 'various' national NRPs and the German defence and infrastructure programme. Due to their close economic ties with Germany, Central European countries are in fact among the main beneficiaries (especially Polish and Czech defence companies).
The Outlook
.Economic growth in Eastern European countries continues to exceed the more moderate pace observed in Western Europe. Poland stands out with a GDP growth forecast of 3.3 % in 2025, while the economies of the Czech Republic and Hungary are expected to grow at around 2.5 %. However, elections in the Czech Republic (in October) and Hungary (in April 2026) could significantly influence relations with the EU.
What to pay attention to
."A possible risk factor," warns Angelika Millendorfer, Head of Cee & Global emerging markets at Raiffeisen capital management, "is the limited presence of technology companies in local indices, where the financial sector plays the dominant role. Banks performed well in the region, although they did not outperform the markets as they did in Western Europe; in Poland they had to deal with the introduction of a new profit tax'.
