December 19, 2016 / 10:56 AM / 7 months ago

CEE MARKETS-Polish stocks, Romanian bonds ease on political concerns

7 Min Read

* Polish stocks, zloty ease slightly on anti-government
protests
    * Regional assets mostly shrug off Ukrainian PrivatBank woes
    * Romanian bond yield at 6-month high on worry over budget
policy

    By Sandor Peto
    BUDAPEST, Dec 19 (Reuters) - Polish stocks dropped and the
zloty briefly dipped on Monday on the fourth day of protests
against the government, which the opposition accuses of
undermining democracy. 
    Investors in the European Union's emerging markets mostly
shrugged off the fact their eastern neighbour Ukraine declared
PrivatBank, its biggest lender, insolvent at the weekend.
    Ukraine's announcement that it would nationalize the bank
helped the country's dollar-denominated bonds rise. 
    Poland's zloty traded flat against the euro at
1000 GMT, recovering from a 0.2 percent early fall.
    Polish stocks also regained some ground, but Warsaw's
bluechip index was still 0.6 percent lower from Friday.
    Opposition lawmakers occupied the main hall of Poland's
parliament for a fourth day and street protests are expected to
continue in the capital Warsaw.
    Tensions rose last week after the ruling PiS party announced
plans to curb media access to parliament, and on Friday a vote
on the 2017 budget was moved outside parliament's main chamber,
with the opposition and media excluded. 
    Economic fundamentals would justify a stronger zloty, but
political concerns bite, Nordea analyst Anders Svendsen said in
a note. "We believe the PLN will remain weak during 2017, but
not this weak, once political uncertainties clear just a bit."
    Economic growth could pick up in the region next year as the
inflow of EU funds is expected to accelerate and wages rise as
employers fight a flight of labour to richer Western states.
    Poland's November producer price index and retail sales
figures, due at 1300 GMT, are expected to show a slight pick-up
from October and may weigh on Polish government bond prices,
Raiffeisen said in a note.
    Polish government bonds were mixed.
    Hungary's bond yield curve flattened a bit, as in Poland.
Yields dropped across the curve, with 10-year papers trading at
3.25 percent, down 7 basis points from Friday's fixing.
    The Hungarian central bank can continue to increase market
liquidity through its swap and 3-month deposit tenders this week
and is expected to further limit the funds commercial banks can
place with its 3-month deposits.
    Polish government bonds were mixed.
    Romania's government bond yields edged further up by a few
basis points. The 10-year yield was bid at 3.74 percent, a
six-month high.
    The Social Democrats, who won Romania's general election a
week ago, are expected to set up a government before the end of
the year. But concerns persist that they will increase the
budget deficit to above the EU's threshold next year.
    
           CEE      SNAP   AT  1100       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0   +0.  -0.1
 crown     =>        240   325   03%    0%
 Hungary   <EURHUF  312.  312.   +0.  0.85
 forint    =>       0000  6900   22%     %
 Polish    <EURPLN  4.41  4.41  -0.0  -3.6
 zloty     =>         68    63    1%    0%
 Romanian  <EURRON  4.51  4.51   +0.  0.19
 leu       =>         05    17   03%     %
 Croatian  <EURHRK  7.53  7.53  -0.0  1.38
 kuna      =>         50    40    1%     %
 Serbian   <EURRSD  123.  123.   +0.  -1.4
 dinar     =>       2500  3100   05%    4%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             918.  917.   +0.  -3.9
                      32    59   08%    7%
 Budapest           3173  3187  -0.4   +32
                    5.97  6.26    4%  .67%
 Warsaw    <.WIG20  1907  1918  -0.5   +2.
           >         .32   .54    8%   59%
 Buchares           7062  7056   +0.   +0.
 t                   .87   .79   09%   84%
 Ljubljan  <.SBITO  708.  710.  -0.3   +1.
 a         P>         34    45    0%   75%
 Zagreb    <.CRBEX  1973  1968   +0.   +16
           >         .50   .33   26%  .80%
 Belgrade  <.BELEX  718.  721.  -0.3   +11
           15>        84    17    2%  .60%
 Sofia     <.SOFIX  578.  578.   +0.   +25
           >          45    45   00%  .50%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.8  0.02  -005   +3b
           RR>        47     5   bps    ps
   5-year  <CZ5YT=  -0.1  -0.0   +02  -4bp
           RR>        85     4  9bps     s
           <CZ10YT  0.51  -0.0   +02   +0b
 10-year   =RR>        8    01  0bps    ps
 Poland                                   
   2-year  <PL2YT=  2.01     0   +28   +0b
           RR>         4        1bps    ps
   5-year  <PL5YT=  2.77  -0.0   +32   +0b
           RR>         9    08  6bps    ps
           <PL10YT  3.44  -0.0   +31  -3bp
 10-year   =RR>        8    26  3bps     s
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.28  0.24  0.22     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.37  0.42  0.51  0.39
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.75  1.77  1.79  1.73
           ><WIBOR     5           5  
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
 *****************************************
 *********************
 
 (Reporting by Sandor Peto)

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