ING Investment Management

Although very different on a country-by-country basis, ING IM predicts that, collectively, Emerging Europe is set to benefit from a desire to advance regulatory enhancements, push ahead with economic liberalisation and pursue privatization initiatives.

Mega companies are bigger than most countries. Quite a few pharma, food, oil and tech companies reach annual revenues of over $50 bln, exceeding the GDP levels of more than 2/3 of the countries in the world. Unusually, these mega companies have performed better than the broad equity markets in the past 12 months.

The current attractive yield of 7 to 8% in combination with solid company credit fundamentals continues to attract new investors into the asset class.

There is little doubt that dark clouds are still drifting on the horizon of the global economy. The Euro crisis still has the potential to erupt into an existential threat for the Eurozone’s economic system with a very destabilizing fall-out for the financial system in the rest of the world.

After Egypt, Russia is the second country where capital flight has been significant this year. Now Russia has a tradition of strong capital flight. Ever since the collapse of the Soviet Union, there have been only a few quarters without a net capital outflow...