The emerging markets have yet to break their losing streak so far in 2013, but Eastern European-focused exchange-traded funds (ETFs) have broken to the upside recently. Poland has been a particularly bright spot in the region. This proud country, the perennial victim of invading European nations throughout the centuries, now enjoys the fruits of autonomy amid a troubled Continent.

Although Poland became a full member of the European Union (EU) as far back as 2004, the country has procrastinated in meeting the EU’s Treaty of Accession requirements that it adopt the euro as its currency.

Thanks to shrewd political maneuvering and the fact that Polish public opinion is largely against adopting the euro—who can really blame them?—Poland isn’t expected to begin using the currency until 2016 at the earliest. And that’s assuming an amendment to the country’s constitution can be secured.

As a result, Poland wields a much higher degree of fiscal and monetary flexibility than other EU nations, even while it enjoys all of the political and trade advantages of being a member state in good standing of the EU.

This “sweet spot” for Poland helped the country’s gross domestic product (GDP) grow by 4.3 percent in 2011 and 2 percent last year, making it one of the best growing nations in Europe.

While generally conservative monetary and fiscal policies as well as a sound banking system assisted that growth, the currency disparity also made a huge contribution. One zloty typically fetches about EUR0.25 and wages in Poland lag those of the core EU nations, so there’s a huge currency and cost arbitrage that has enabled Poland’s production lines to keep running.

This dynamic has become particularly pronounced as a number of European businesses begin turning to Eastern European nations for production work, saving themselves the cost of transporting goods from China.

Nonetheless, Poland hasn’t been totally immune to the economic vicissitudes that have plagued the rest of the EU since 2009. The National Bank of Poland predicts that the nation’s economy will grow by just 1.1 percent this year.

Consequently, while Poland’s economy has proven one of the most resilient for several years, the government there has elected to take advantage of its budgetary autonomy to stimulate its economy. The government has announced that it will increase its budget deficit by about 1 percent of GDP this year, equal to almost USD16 billion. For a country with an annual GDP of about USD800 billion, that’s a substantial stimulatory jolt.

The Poles have plenty of leeway to act, thanks to years of responsible policy. Larger deficits are typically a negative for a currency, but the Polish zloty has continued moving higher on the news as traders clearly view stronger growth as a fair trade off. That’s helped along by the fact that Poland typically runs current account surpluses because of strong pan-European demand for its goods and services.

Market Vectors Poland (NYSE: PLND) is a great play on the continued strength of the Polish economy, vis-à-vis the broader European region.

Financial services figure prominently in the ETF’s holdings at 37.1 percent of assets, but that’s lower than other competing products and largely reflective of the major role financials play in Poland’s economy. But at more than 13 percent of assets each, basic materials and energy also have large weightings in the fund, due to the relative resource wealth of the country.

The markets of core European nations have outperformed Poland over the past year. However, now that Poland is stimulating while its bureaucrats in Brussels continue dragging their feet on the euro, we expect this vibrant nation to soon regain market leadership.

Portfolio Roundup

Keppel Corp’s (OTC: KPELY) first-half earnings report issued this morning showed that net profit fell by 47 percent to SGD677 million, compared to SGD1,272 million last year. Earnings per share declined commensurately, down to SGD0.375 cents from SGD0.71 cents in the same period in 2012.

While slowing economic growth played some role in the decline, the real culprit was a difficult comparable period. Last year’s result included one-time gains on sales of units at the real estate division’s Reflections at Keppel Bay. With the impact of those sales backed out, first-half 2013 performance was actually in line with last year’s.

The report also conferred positive news. The offshore and marine division has secured more than SGD3.5 billion in new orders so far this year, with orders from Mexico being particularly strong. In all, the division’s order book currently stands at SGD13.1 billion with work going out into 2019. Of the 22 rigs scheduled for delivery this year, 13 have already been completed.

At the property division, despite stricter home sale rules in mainland China and policy changes in Singapore, more than 2,000 homes were sold in the first half of the year, the highest volume on a year-over-year basis in two years. Occupancy levels at key office properties in Singapore’s central business district and Marina Bay have also held up well, making a positive contribution in earnings.

Investors should keep in mind that the company’s earnings slide was a result of a tough comparable period rather than deterioration in the underlying business. It’s also worth noting that shares were up in Keppel’s native Singaporean market after the announcement. Keppel Corp remains a buy up to 20.