Beyond general information of the Funds, the portfolio reports offer a strategic overview on the latest performance.

Without Asia, there would be only a tortuous recovery from the crisis

Asia is the most populous continent, counting more than 4 billion inhabitants, or more than 60% of the Earth’s population. It is not only in this respect that it leads the world however, as if we narrow our definition of Asia to exclude Japan, then it is a continent that is emerging from the global economic crisis considerably more rapidly than any other region. Even more encouraging is the fact that in the meantime Asia has outgrown its initial export-driven growth model. We may be witness in the coming years to a sort of paradigm shift, where, for the first time since the Asian crisis of 1997, internal demand in the region (particularly in the Chinese market) may take over as the key driver of Asian growth. The latest prognoses envisage annual GDP growth in the region of 8.4% this year, and 8.2% in 2011. By comparison, the developed world – and even the developing world – lags far behind, having seen respective rates of GDP growth of around 2% and 6.6% in 2009, and looking ahead to expected annual growth figures of 2.2% and 6.4%, respectively, in 2010. With expected GDP growth of 10.5% this year and 9.8% in 2011, China is indisputably the driving force in the region. Is there anything that could stop this steamroller?

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With the steep rise in public debt throughout the world over the past year, management of the global financial crisis is carrying a high price. Due to the recession tax bases have shrunk, while unemployment benefit-related expenditures have soared. Restructuring of debt related to the reorganization of the financial sector and discretionary measures taken to invigorate the economy are further increasing debt burdens. Moreover, all this comes at a time when much of the developed world and the majority of emerging countries (excluding the American continent and the Middle East) are already struggling with long-term fiscal crises due to the financial imbalance brought on by the ageing of their societies. Government bond issuance in Germany is double that of last year, while Greece’s serious financing difficulties have raised the spectre of sovereign bankruptcy on the horizon in the developed market, and in time other developed countries may follow.

In this environment, the countries of the Central and East European region must compete for the favours of investors and offer attractive conditions for the sale of their bonds. So how much pressure should we fear on the supply side? Below we will examine the bond issuance plans of three of the Visegrád countries, from which we will attempt to extrapolate the likely tensions between supply and demand in the year ahead.

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