Investors have been enamored by Eastern Europe's growth potential ever since the collapse of the Soviet Union, but have been repeatedly disappointed by the deep business/politics nexus, inadequate infrastructure, unfriendly regulations and more. Amongst these, the Czech Republic, and its stock market have stood as a promising beacon with a well developed industrial base, educated and low-wage population and strategic geo-location. Its economy has not disappointed either, regularly growing at 2-3% per annum, peaking at 10% back in 2007 and recovering smartly from the 2009 downswing with near 2% growth again in 2010/11.

The Prague Stock Exchange index has been down in the last 12 months by over 17% (late 2010-2011 comparison) - however this index is not the best proxy for the growth story of Czech Republic. Czech Republic has the presence of several multi-nationals including Phillip Morris, Red Hat, Amgen and more, but also boasts local presence from Czech Power Company (CEZ; CZAVF.PK) - a Financial Times 'top 500' company.

There is significant foreign direct investment (FDI) that is underway in Czech Republic as well to take advantage of the favorable business environment, which is chockfull of direct investment opportunities - from nanotechnology to clean technology, automotive and aerospace. From a retail investor perspective, the best bet to invest in Czech Republic comes from investing in country specific operations of the multi-national firms (Telefonica Czech Republic, Zentiva and more). Alternatively, ETF investing such as in Central & Eastern Europe funds (CEE) and MSCI Eastern Europe offer the best way to get exposure to Czech Republic economic growth.

If interested in Czech Republic, either go the direct investment route (investing directly with a business), or pick the country specific versions of multi-national firms and the biggest Czech Republic companies!

Happy investing!