Is the “Convergence Trap” the New Risk for the CEE and CIS?

On September 29th, the global equity index provider FTSE Russell announced plans to upgrade Poland from an “Advanced Emerging” to a “Developed” market, making it the first country from Central and Eastern Europe (CEE) to join the ranks of the twenty-four most advanced economies. The upgrade provides fresh evidence of the “success story” of the Polish transformation and carries important practical implications, as foreign investors may now compare Polish companies to German or American equities, as opposed to Russian or Turkish stocks. It is likely that this upgrade will also encourage investors to increase their allocation in the Polish market.