While everyone is looking at the S&P 500, something interesting is happening east of the German border. Poland, Hungary and the Czech Republic are among the strongest stock markets in Europe and yet are valued much more favorably than the rest.
The figures:
The MSCI EM Eastern Europe ex Russia gained over +54% on an annualized basis in 2025 (EUR, net return), while the MSCI Emerging Markets only gained +17.76% in the same period. Nevertheless, the region's forward P/E ratio is around 13, while MSCI Europe is trading at 17. More favorably valued, stronger growth.
What is driving growth?
Poland is the main driver. The country will receive around 60 billion euros from the EU recovery fund alone, plus a further 76 billion euros from the EU cohesion fund by 2029. According to the IMF, the Polish economy will grow by around 3.1% in 2025 and consistently at a similar level in 2026. Nearshoring is doing the rest: German companies are increasingly relocating production to Poland due to its technological capabilities and competitive costs.
Hungary could be the next catalyst. Peter Magyar won the parliamentary elections on April 13, 2026 with a two-thirds majority, replacing Orban after 16 years. Magyar has announced that he will be the first to release the frozen EU funds for Hungary and correct course towards the EU and NATO. According to Avaron Asset Management, the release of EU funds could boost GDP by 8 to 9%, although this is an individual estimate by an asset manager, not an IMF consensus.
How to invest, for example:
The Amundi MSCI Eastern Europe Ex Russia UCITS ETF (LU1900066462) tracks the index with a TER of 0.50% p.a. and automatically reinvests dividends. Composition: Poland approx. 70%, Hungary approx. 21%, Czech Republic approx. 9%. Dominant sector: Banks with over 50% weighting.
For those who want to diversify actively and more broadly: The Trigon New Europe Fund (LU1687403367) invests in Poland, Hungary, the Czech Republic, Romania and the Baltic states, with a focus on value, high dividend yields and sustainable cash flow.
The cluster risk is real. Poland dominates each of these indices with around 70%, while the Czech Republic concentrates on a few heavyweights. Added to this is energy dependency: all three countries are net energy importers and therefore susceptible to geopolitical shocks such as the Iran conflict. And currency risks from the Polish zloty, Hungarian forint and Czech koruna have a direct impact on returns.
Eastern Europe is not a core position. But as an addition with a forward P/E ratio of 13 while Western Europe is trading at 17, it is at least worth considering.
Sources: MSCI factsheet (EUR, net return, as at March 2026), DAS INVESTMENT March 2026, IMF World Economic Outlook, Avaron Asset Management, justETF.
No investment advice.
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