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The Investment Institute by UniCredit

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CEE equity markets still offer attractive opportunities 27 July 2026

CEE equity markets have delivered mixed YTD performance, as Hungary and Romania outperformed EM equities, Poland delivered solid performance, while the Czech market underperformed. Valuations remain attractive in Hungary and Poland, where local stock markets are dominated by domestically oriented firms. OUTSTANDING YTD PERFORMANCE LIFTS VALUATIONS IN CEE EQUITY MARKETS CURRENT P/E VALUATIONS STILL LOOK ATTRACTIVE IN HUNGARY AND POLAND P/E Valuation Change Change in 12M fwd EPS YTD 60% Price Return YTD Current P/E Valuation (rs) 18 50% 16 40% 14 30% 12 20% 10 10% 8 0% 6 -10% -20% 4 -30% 2 -40% 0 MSCI Czech MSCI Poland MSCI Hungary MSCI Romania MSCI EUROPE MSCI EM U$ U$ U$ U$ U$ U$ Source: LSEG, The Investment Institute by UniCredit Note: P/E ratios are based on market consensus of 12M forward EPS forecasts. Total returns YTD are 3-5% higher than price returns in the CEE markets due to dividend payouts.

THE CONTEXT CEE stock markets have performed very well in the last eighteen months, outperforming equity markets in Western Europe. This outstanding rally has taken place despite structural characteristics that continue to distinguish CEE markets from developed markets. Indeed, local stock exchanges in CEE are characterised by low liquidity and high concentration, with about 90% of market capitalisation typically concentrated in a single-digit number of blue chips.

UniCredit - Strictly Confidential The Investment Institute Coffee Break by UniCredit 27 July 2026

Therefore, performance and valuations may be driven by sector-specific factors, local fund flows and the regulatory environment, in addition to common factors such as the country risk premiums, global risk sentiment and the valuations of regional sector peers. The only exception is the Polish market, which has the largest market capitalisation and offers greater diversification across sectors. In addition, the relatively small free float of some listed companies and the dominance of domestic institutional investors can amplify market moves and lead to valuation discrepancies compared to broader emerging- and developed-market peers.

THE DATA The MSCI Emerging Markets Eastern Europe price index has been the best-performing MSCI EM regional segment since January 2025, with a 68% return in USD terms registered in 2025 followed by a 16% YTD return in 2026. Its performance has been supported by strong gains in Poland and other CEE markets, although performance across individual CEE markets has been uneven this year. The underperformance of the highly concentrated Czech equity index is largely attributable to macro-driven, and to a lesser extent regulatory, factors that have curbed the profitability of its key constituents (local banks and the local utility giant), resulting in downward revisions to earnings expectations. Following two years of outstanding returns in 2024 and 2025, the price- to-earnings (P/E) ratio based on 12M forward earnings estimates has increased to levels comparable to Western European peers. The Polish stock market has generated a solid 14% return. A more diversified equity market dominated by energy firms, banks and retailers continues to benefit from stable, domestically driven economic growth, which is expected to continue in the coming years. Although the valuation discount narrowed in 2025, current levels still seem attractive compared to regional peers, with an average P/E ratio of 11.2. In Hungary, the compression in the country risk premium and a sharp drop in local government bond yields has supported the equity market rally this year (+34%), as investors expect the new government to foster a more market-friendly regulatory environment and gradually phase- out corporate windfall taxes. The dominance of energy and financial stocks partly explains the market’s undemanding valuations compared to more diversified European benchmarks. However, with an average P/E ratio of 9, current valuations remain attractive. The Romanian equity market’s…