To: Maurice Winn who wrote (72552 ) 2/18/2010 3:22:55 AM From: Haim R. Branisteanu Respond to of 74559 Eastern Europe Boosted as Greek Crisis Spurs Bondholder Switch By Laura Cochrane and Ye Xie Feb. 18 (Bloomberg) -- Investors are returning to eastern Europe a year after the region’s banking crisis triggered a global market selloff, as concern Greece may be unable to fund itself bolsters countries with lower borrowing needs. Pacific Investment Management Co., manager of the world’s largest bond fund, said it added Polish debt holdings last week and HSBC Holdings Plc, Europe’s biggest bank by market value, said Hungary’s stocks are a “buying opportunity.” Czech, Turkish and Russian bonds are poised to outperform because the countries will have about a third of the debt levels of Greece and Italy by 2011, according to Credit Agricole Cheuvreux, the brokerage unit of France’s largest bank by branches. Investors are seeking to capture the cheapest valuations in seven months for the MSCI EM Eastern Europe equity index relative to the MSCI World Index and the widest gap in bond yields over U.S. Treasuries since December. Hungary, the first European Union member to be bailed out by the International Monetary Fund during the credit crisis, has halved its budget gap since 2006 while Poland has begun a record $10 billion of state asset sales to help fund its shortfall. “We’ve seen the first wave of contagion in which the market was non-discriminating,” said Agnes Belaisch, a London- based emerging-market strategist at Threadneedle Asset Management Ltd. and former senior economist at the IMF. “The second wave, which is happening already, is differentiation.” bloomberg.com My position of buying the RUB v the EUR is doing just fine - 7% unleveraged within about one month