Emerging Europe’s exchange traded funds (ETFs) had a strong second quarter. That doesn’t mean the nations in the region are out of the woods yet, though. The concern now is whether global sentiment toward the region might sour.

Some currencies in Eastern Europe are trading at new highs for this year, and the cost of insuring against sovereign-bond defaults has dropped as confidence about the global economy continues to grow. More and more investors seem willing to take on riskier assets.

On the flip side is lingering uncertainty about where the global economy is going, say Katie MArtin and Clare Connaghan for The Wall Street Journal. If it turns sharply negative, investors could lose their risk appetite and head for the exits.

Now that emerging Europe has departed from full-on crisis mode, the International Monetary Fund (IMF) is handing down more stringent requirements for monetary lending. The result would be a range of different deals in which the most needy countries will have to get their public deficits under control in order to receive funds. Michael Winfrey for Reuters reports that these measures are being taken because the immediate threat of regional collapse has faded and now the IMF can spend its time focusing on the unique issues of various countries.

  • SPDR S&P Emerging Europe (GUR): up 35.4% year-to-date

For more stories about emerging Europe, visit our emerging markets category.

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