The Russell Frontier Europe Index has returned 5.8% year-to-date as of March 18th, with country constituent Cyprus returning 8.2% year-to-date as the Cypriot government announced a levy on bank deposits in the country to meet euro-zone bailout terms over the weekend.
Russell Frontier Europe Index markets Serbia (13.9%), Croatia (12.2%), Estonia (11.8%), Lithuania (11.1%) and Romania (9.4%) have led the region year-to-date, while Slovenia (-3.1%), Bulgaria (-2.2%) and the Ukraine (-1.5%) have trailed within the region for the same time period.
"While the small size of Cyprus means that the country does not necessarily create a precedent for the rest of the Eurozone, recent events there do call into question the true strength of European solidarity and ability to collectively address the economic challenges facing the region. And, like the recent uncertain outcome of the Italian elections, it adds further uncertainty to the economic climate," said Wouter Sturkenboom, investment strategist with Russell Investments Europe. "Investors will be watching the situation in Cyprus very closely. While it is unlikely to ignite a major European situation on its own, the action of making bank deposits vulnerable to international creditors could set a rather dangerous precedent."
| Russell Frontier Europe Index Performance | ||||
| Index / Country Constituent | 2013 YTD as of March 18th, 2013 | 2012 | ||
| Russell Frontier Europe Index | 5.8% | 9.5% | ||
| Bulgaria | -2.2% | -1.2% | ||
| Croatia | 12.2% | 1.8% | ||
| Cyprus | 8.2% | 8.3% | ||
| Estonia | 11.8% | 37.6% | ||
| Lithuania | 11.1% | 18.8% | ||
| Macedonia | 4.4% | -10.4% | ||
| Malta | 6.0% | 27.3% | ||
| Romania | 9.4% | 25.6% | ||
| Serbia | 13.9% | 3.5% | ||
| Slovakia | -0.8% | 14.3% | ||
| Slovenia | -3.1% | 12.0% | ||
| Ukraine | -1.5% | -8.4% | ||
Source: Russell Investments
