5 Ways to Profit from Slovakia’s Entry into Eurozone
Sep 25th, 2008 | By Sara Nunnally | Category: International InvestingFrom January 2009 Slovakia will be the eurozone’s newest (and 16th) member. The stability the single currency provides the fast-growing country is attracting considerable investment. But Sara Nunnally says trading on the local stock market remains complicated and risky. Instead, she recommends the numerous international tech companies that are flocking to the area…
This from Taipan Publishing:
In my last post, I noted that Krakow was “under construction.” Well, I’d like to extend that to more than just the city. There was barely a road I travelled on that wasn’t coned off and rerouted for some kind of improvement. And one of the reasons Poland is spending so much time updating its infrastructure and roads is to become more attractive to foreign investors.
On one stretch of highway, I saw two major manufacturing plants: BASF (BAS:Frankfurt) and Daewoo (004550:Korea).
Interestingly, the Slovak roads are in much better condition. Investment is still going strong, though, and one major private investor is expanding a huge resort here in the High Tatras, in the Pieniny National Park.
Now, that brings up an interesting point to growing so quickly…
And sometimes, fast growth comes at the cost of quality. Take the Czorsztyn-Niedzica-Sromowce Complex for example. This is the dam provides only half the electricity it could have had it been built right. It was finished in 1994 and has a capacity of 160 million kWh of generation a year. That’s less than what Rhode Island uses in a month…
But Slovakia is certainly breaking away from the past, and it’s financial markets are trying to do the same. The SAX Index on the Bratislava Stock Exchange (BSSE) has climbed 3.54% in August, year over year.
That said, investors considering the Slovak exchange need to be extra dilligent. The BSSE has three different markets: the main listed market, the parallel listed market, and the regulated free market. It gets a bit confusing, and to top it off, most investors aren’t looking at companies… They’re looking at debt.
Also, as the first half of the year has been extremely scary for the rest of the world, the same goes for Slovakia, too.
If you’re interested in looking further at how the market has performed, check out the Semi-Annual Fackbook 2008. Lots of great information there. I’ll be digging through it for the next few days to see if there are any gems worth taking a closer look.
As of now, a better bet might be to look at the international companies investing in the area. Of course, technology and electronics companies are flocking to this region, like Canon (NYSE:CAJ), Ericsson (Nasdaq:ERIC), and Motorola (NYSE:MOT), and automanufacturing is also a big sector. You’ll recognize names like Nissan (Nasdaq:NSANY), Renault (Paris:RNO), Volvo (OTC:VOLVY).
With the euro coming in January, 2009, this place is on the tip of a lot of people’s tongues, and investors already have their ears to the door.
Source: International Investing: Crossing Borders
Advertisement
And likely as much as 190 times your money over the next few years. Don't scoff — it has happened before under almost the exact same circumstances that one small petroleum company is now in prime position to cash in on. But you'll have to move fast to ride along for 190-fold gains (or more). Download your copy of this Special Report with all the details...
As Editor of the investment advisory service
I picked up a copy of the Slovak Spectator (in English) and read another interesting article about the change over to the euro.
Apparently the Slovak Parliament passed a law on September 16 that will allow the government to regulate prices if they believe price hikes after the change over are unjustified.
This has businesses a bit miffed… They say, of course, that the market will take care of any irregularities, and that government intervention would only delay a major spike.
The cost of food and fuel has already been climbing, and the main question is, how will the government judge if the price hike was valid due to market fluctuations or just to take advantage of the move to the euro?
As of August 24, all signs with pricing must be listed in both Slovak Crowns and euros. After traveling through three other countries with three different currencies, it’s nice to see something familiar.
This price regulation law will go into effect on November 1, and it stipulates that the government can regulate prices if it detects signs of unjustified price hiks and speculation.
But it also give the government the power to regulate prices if they climb above “what it considers optimal.”
Of course, the government says it would only do so after throrough scrutiny, but that’s not really any consolation to businesses.
The euro goes into effect on January 1, and it will only be a matter of time before we hear more about this new law.
Sara Nunnally
Editor, Taipan Trader
http://blog.taipanpublishinggroup.com/