1. 1 Why invest in Eastern Europe? Sven Kunsing Head of Eastern European Investment Management

2. 2 After all these years… Do we still find reasons to invest in Eastern Europe? SEB Growth Fund (Bloomberg: UHIKASV ET) is an Estonian domiciled Eastern European equity fund managed by SEB EE Equity Team

3. 3 Important starting point New Europe vs Russia (CIS) Convergence European Union policies Service oriented sectors Subcontracting Small economies Energy Other resources Heavy industries Emerging consumers Puzzling politics

4. 4 Competitiveness Hourly labour costs in industry and services Minimum, maximum and median levels in EUR Source: EuroStat

5. 5 Competitiveness Average weekly working hours +8.1% Source: EuroStat

6. 6 Competitiveness Tax competition (tax revenues as % of GDP) Source: EuroStat

7. 7 Result: Strong GDP growth Source: EcoWin, European Commission Spring 2007 Forecast, SEB Nordic Outlook August 2007

8. 8 Convergence 5 year gov’t spreads to EUR

9. 9 Convergence FX rates in CEE3

10. 10 Bumpy road to Monetary Union InflationLT interest rate Fiscal balance % of GDP 06 Public debt % of GDP 06 Currenc y Currency regimeExpected EMU entry (optimistic scenario) Maastricht reference 3,0*6,4*-3,060,0Smooth participation in ERM II for 2 years Estonia4,7n/a, but ok+3,84,1KroonERM II2011 Latvia7,04,5+0,410,0LatERM II2012 Lithuania4,2 -0,318,2LitasERM II2011 Poland1,65,3-3,947,8ZlotyFloat2012 Hungary6,27,1-9,266,0ForintTarget zone(EUR)2013 Czech1,93,9-2,930,4KorunaManaged float (EUR)2012 Slovenia2,64,0-1,427,8TolarERM IIAlready in! Slovakia3,54,5-3,430,7KorunaERM II2009 Bulgaria6,24,3+3,322,8LevCurrency board (EUR)2016 Croatia2,64,2-2,342,1KunaManaged float (EUR)2018 Romania5,27,5-1,912,4LeuManaged float (EUR)2017 Serbia8,3n/a1,634,9DinarFree-float2020? Turkey10,117,50,460,7LiraFee-float2025? *Referring to the period April 06 to March 07 Source: ECB Convergence report May 07

11. 11 Economic growth Back to the future – you have already seen this 25 years ago

12. 12 Why invest in Russia?

13. 13 Emerging middle class Strong natural resource base Fast GDP growth Imminent WTO accession Ongoing economic reforms Top 5 reasons

14. 14 Russia: while huge, it’s still so small… Source: IMF WEO Database, April 2005

15. 15 Russia: … but catching up Source: IMF WEO Database, April 2005

16. 16 Strong GDP growth Source: EcoWin, SEB

17. 17 Russian growth Not so production-driven…

18. 18 Russia: Macroeconomic developments GDP growth +7.5% Inflation 8.7% (second year in single digits) Investment growth +17% Real disposable income +14% Trade surplus 115bn USD (9.4% of GDP) Federal budget balance 4% of GDP Early prepayment of Paris Club debt (now ext public debt/GDP ca 4%, one of lowest among all EM) Macroeconomic success continues in 2007

19. 19 Russia: strength all over Low public debt Strong reserves Strong current account Strong fiscal balance

20. 20 And after all these years… We still keep on beating the index SEB Growth Fund (Bloomberg: UHIKASV ET) is an Estonian domiciled Eastern European equity fund managed by SEB EE Equity Team

21. 21 Thank you! Sven Kunsing Head of Eastern European Investment Management sven.kunsing@seb.ee +372 6656 645