As our economists continue to expect the euro area to remain on a recovery path, we revisit the case for the euro-area growth proxies – that is SEK, NOK, PLN, HUF and CZK. All five economies are closely linked to the euro area and Germany in particular and should benefit from the recovery.
• While this argues for a broad outperformance vs. other regions, we find the case for “the euro growth proxy trade”, that is the notion that CE3 and Scandies tend to amplify the EUR strength and act as higher beta plays for the economic recovery rather difficult.
• We think it is likely to play out only selectively.
• Our analysis below suggests HUF and PLN are in a stronger position to benefit, while SEK and CZK are more likely to underperform.
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