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Subject

The prospects for Emerging Europe assets.

Significance

Despite record levels of outflows from emerging market (EM) bond and equity funds in 2015, the financial markets of Central-Eastern Europe (CEE) have remained remarkably resilient. They are likely to continue to outperform those of Latin America and Emerging Asia next year, because of a combination of relatively strong fundamentals and liquidity support from the ECB.

Impacts

Investor sentiment towards developing economies is now shaped almost entirely by dramatic declines in commodity prices.

US monetary policy will now prove secondary to the plunge in oil prices.

Growth in the CEE region picked up significantly this year and is still expected to remain relatively robust in 2016.

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