Slovakia seems to be a real up-and-comer, but exposure options as far as exchange traded funds (ETFs) go are limited for the time being. However, investors can take a back-door approach when attempting to capture this country.
David Riedel, president and founder of Riedel Research Group, told CNBC why he thinks investors need to take a serious look at the region. For starters, it’s been largely immune from the credit crunch that has vexed the rest of the global economy.
Throw in a 19% flat-tax system, fast growth, low wages and a skilled workforce, and it could be a recipe for success.
Slovakia has undergone major changes since a 1993 breakup with the Czech Republic, and joined NATO and the European Union in 2004. On Jan. 1, 2009, the euro will become its currency.
Cars make up 30% of Slovakia’s exports, and some of the world’s biggest car makers have bases there, including Volkswagen and KIA. Per capita, it’s Europe’s biggest car producer, and foreign investment in the automotive sector has been strong.
Getting in can be a challenge, since it’s such a small country. But two banks are major holdings in iShares MSCI Austria (EWO): Erste Bank, 15.2%; and Raiffeisen Interational Bank-Holding, 4.8%. Erste Bank and Raiffeisen are based in Austria, but operate in several Eastern European countries, including Slovakia.