By Marton Dunai
BUDAPEST, Dec 30 Hungarian markets far
outperformed regional peers in 2016 as ratings agencies restored
the country's investment grade status and its improving economic
outlook lifted shares and the forint, while regional peers
battled waning market confidence and political problems.
Against a jittery international backdrop that included the
surprise vote by Britain to leave the European Union and Donald
Trump's victory in the U.S. Presidential election, regional
differences marked Budapest as a winner.
Hungarian shares rose by a third in 2016, hovering
just off a fresh all-time high of 32,040 on the last trading
daay of the year. All blue chips benefited from sound
fundamentals but the improvement in the country's financial
sector helped the index the most.
Relations improved markedly between banks and the government
of Prime Minister Viktor Orban, a keen user of unorthodox and
often unexpected economic policy in the past. A heavy bank tax
was eased after a landmark agreement in 2015.
Banks produced their best year in recent memory in 2016,
with most of them returning to profits after years of heavy
losses. They expect weaker profit but growing lending in 2017,
the country's top banker told Reuters.
Shares of Hungary's biggest lender, OTP Bank, rose
40 percent this year.
Banks, meanwhile, dragged lower the Prague Stock Exchange's
main index, which lost 3.8 percent in 2016, marking its
lowest close since 2011.
The region's most liquid market in Poland added 5
percent this year but remains 25 percent below its 2007 all-time
The forint also benefited, adding 1.3 percent this year,
versus a 3.8 percent drop by the zloty and a broadly flat Czech
Hungary has been bolstered by three upgrades to its debt
rating which returned the country to investment grade and helped
it weather the storm on international markets better than peers.
The country's benchmark 10-year bond trades near recent
highs, while Polish paper has yet to recover from an
international sell-off that began on bets for an interest rate
hike in the U.S. and continued on Trump's surprise victory.
The zloty and Polish bonds have also suffered from conflict
between Poland's new nationalist-minded government and European
institutions, as well as market worries over political stability
and the country's fiscal standing.
The crown remained in the intervention regime by the Czech
central bank, preventing it from strengthening beyond the level
of 27 crows per euro for the whole year. The currency hovered
just above that level for most of the year.
CEE MARKETS SNAPSH AT 0953 CET
Latest Previo Daily Change
bid close change in
Czech crown 27.020 27.021 +0.00 -0.08%
0 0 %
Hungary 311.03 310.80 -0.07% 1.16%
forint 00 00
Polish zloty 4.4180 4.4114 -0.15% -3.62%
Romanian leu 4.5290 4.5350 +0.13 -0.22%
Croatian 7.5620 7.5615 -0.01% 1.02%
Serbian 123.38 123.59 +0.17 -1.55%
dinar 00 00 %
Note: daily calculated previo close 1800
change from us at CET
Latest Previo Daily Change
close change in
Prague 920.21 919.58 +0.07 -3.78%
Budapest 31916. 31847. +0.22 +33.4
99 87 % 3%
Warsaw 1947.3 1946.3 +0.05 +4.75
7 2 % %
Bucharest 7075.0 7072.2 +0.04 +1.01
9 8 % %
Ljubljana 706.73 711.28 -0.64% +1.52
Zagreb 1989.6 1991.3 -0.09% +17.7
3 3 6%
Belgrade 716.66 714.72 +0.27 +11.2
Sofia 586.42 586.51 -0.02% +27.2
Yield Yield Spread Daily
(bid) change vs change
2-year -0.878 0.014 -009bp +2bps
5-year -0.227 0.015 +032b +0bps
10-year 0.463 -0.016 +028b -2bps
2-year 1.989 0.003 +278b +1bps
5-year 2.803 0.004 +335b -1bps
10-year 3.55 0.003 +337b +0bps
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
Czech Rep <PR 0.28 0.13 0.22 0
Hungary <BU 0.37 0.41 0.49 0.37
Poland <WI 1.75 1.77 1.795 1.73
Note: FRA are for ask
(Reporting by regional bureaux; Editing by Toby Chopra)