Estonians investing in PIIGS

TALLINN - The investments by Estonians into the so-called PIIGS states – Portugal, Italy, Ireland, Greece and Spain – have increased, reaching nearly 1.3 billion euros at the end of March, which forms nearly 8 percent of all Estonian foreign investments, reports Postimees.
For example, 663 million euros has been invested by Estonia in Italy, while investments in Greece amount to some 28 million euros.

Eesti Pank’s statistics show that the debt crisis has not made Estonian investors flee from problematic states. As compared to the time right before the debt crisis, the end of 2009, investments of Estonians into PIIGS states have increased by 58 percent, while the growth of all Estonian foreign investments was 33 percent.
Investments to all PIIGS states, except Greece, grew. Investments into Greece have decreased by half as compared to the end of 2009. Although the debt crisis is becoming more intense, investments into all PIIGS states grew as compared to the end of last year, too.

Two examples of companies that have not been scared by the debt crisis are Bigbank and Admiral Markets. Bigbank opened a branch office in Madrid, Spain at the beginning of the year. Bigbank’s board member Targo Raus said that the decision in favor of Spain was made, among other reasons, because of the big population figure of the state and the local banking that was affected by the crisis.

Admiral Markets is preparing to expand to Spain and Italy. In a long term perspective, the firm plans to expand to Latin America, and this is easier to do via Spain, said the firm’s sales and marketing manager Milana Reinson.
Katrin Rahe, Swedbank Investment Funds Fund Manager, said that PIIGS states face different problems and, thus, they have to be looked at separately when investing. Two simple aspects that help investors to get an idea of the market are interest levels of the states’ short- and long-term bonds, and the exchange rate of the euro.

Estonia’s Economy and Communications Ministry does not call on Estonian investors to flee from the debt-crisis ridden states, either. “It might offer good entrance possibilities for more risk-favoring investors, when they can evaluate their risks reasonably,” said the Ministry’s economic analysis service expert, Karel Lember.