CEE and SEE Stock Markets: Diversity, Unity and Perspective

Abstract:

Central-Eastern Europe (CEE) and South-Eastern Europe (SEE) demonstrate both similar trends in the development of stock markets and have simultaneously special distinctive mechanisms. If the CEE markets have moved much closer in the direction of unification with the markets of Western Europe and the USA, then the SEE markets partly possess the determination of "looking into the past". The basis for such conclusions is the analysis of representative portfolios based on the Sharpe ratio and utility maximization.

At the same time, the members of the pooled optimal portfolio are a predictable business, what is shown based on a range of machine learning methods.

The temporary imbalances in a certain way make the entry of companies from both regions into each other's stock markets a mutually beneficial step. A special position is the field of software, for which success in the markets of both regions seems completely guaranteed.