February 14, 2017 / 10:58 AM / 6 months ago

CEE MARKETS-Polish stocks rebound on GDP, Czech party wants bank tax

* Hungary, Czech Q4 GDP lower, Polish higher than forecast
    * Polish stocks rebound, index still down on Orange Polska
    * GDP, inflation news unlikely to alter monetary policies
    * Czech PM's party puts bank tax on election platform

 (Adds Czech bank tax plan and impact, Hungarian central bank
comments)
    By Sandor Peto
    BUDAPEST, Feb 14 (Reuters) - Warsaw stocks shaved early
losses on Tuesday and the zloty rebounded after Polish figures
showed higher-than-expected growth for the fourth quarter of
2016.
    Stocks mostly retreated in Central Europe after a global
rally helped the indices in Bucharest, Prague and
Warsaw reach their highest levels since 2015. 
    Prague and Bucharest shed about 0.6 percent.
    Bank stocks led Prague lower, with Moneta 
shedding 2.4 percent, after Czech Prime Minister Bohuslav
Sobotka said his party would propose a tax on banks as part of
its campaign for October elections. 
    Only Budapest, which has underperformed this year
after two years of soaring, set another record high. 
    Warsaw fell 0.2 percent, regaining almost all the ground
lost in early trade. It was lower only because Orange Polska
shares plunged 11.5 percent after the telecoms operator
reported a loss for 2016. 
    The index rebounded after Poland reported 2.7 percent
economic output growth for the last quarter of 2016, above
analyst forecasts, while the Czech Republic and Hungary reported
a slowdown.
    Romania's economy grew by a robust 4.7 percent.
    The zloty reversed its early weakening against the
euro, and it firmed 0.3 percent to trade at 4.3011 
    A rise in household consumption has been a key growth driver
in the region. Investments have probably picked up faster in
Poland than elsewhere, analysts said.
    Hungary's annual inflation rose to 2.3 percent, above
forecasts, underlining the fact that price growth is picking up
fast in the region. 
    Hungary's big trade surplus, which reached 10 billion euros
last year, will allow the central bank to maintain its dovish
rhetoric despite the inflation rise, so as to prevent a firming
of the forint, Citigroup analyst Eszter Gargyan in a note.
    Commenting on the figures, the bank said that the impact of
increased crude prices could fade in the next months, while core
inflation trends had not changed.   
    The negative Czech GDP surprise is unlikely to alter the
monetary policy course either as growth is expected to
accelerate in both countries later this year, analysts said.
    The Czech central bank has said it would remove its cap,
which keeps the crown weaker than 27 versus the euro,
around the middle of this year.
    "The Czech economy is in good form and the situation on the
labour market is starting to get tight," Generali Investments
CEE chief economist Radomir Jac said in a note, adding the cap
could be removed in April.
    
              CEE        SNAPS   AT  1309          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.05
                            00     45     2%      %
 Hungary                 308.3  308.4   +0.0  0.17%
 forint                    000    450     5%  
 Polish                  4.301  4.312   +0.2  2.39%
 zloty                       1      1     6%  
 Romanian                4.505  4.500  -0.12  0.65%
 leu                         5      0      %  
 Croatian                7.455  7.449  -0.07  1.34%
 kuna                        0      5      %  
 Serbian                 123.7  123.9   +0.1  -0.36
 dinar                     900    600     4%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  965.4  972.1  -0.69   +4.7
                             7      9      %     6%
 Budapest                33651  33356   +0.8   +5.1
                           .27    .19     8%     5%
 Warsaw                  2175.  2179.  -0.20   +11.
                            22     66      %    67%
 Bucharest               7599.  7640.  -0.54   +7.2
                            53     89      %     6%
 Ljubljana               758.0  760.9  -0.39   +5.6
                             1      6      %     3%
 Zagreb                  2166.  2154.   +0.5   +8.5
                            26     48     5%     9%
 Belgrade     <.BELEX15  702.9  703.5  -0.08  -2.01
              >              4      2      %      %
 Sofia                   601.6  606.1  -0.74   +2.6
                             6      4      %     0%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.69  -0.13   +010  -12bp
              >              7      2    bps      s
   5-year     <CZ5YT=RR  0.122  0.016   +055   +2bp
              >                          bps      s
   10-year    <CZ10YT=R   0.56  0.065   +021   +6bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  2.211   -0.1   +301  -9bps
              >                          bps  
   5-year     <PL5YT=RR  3.182  -0.00   +361  -1bps
              >                     6    bps  
   10-year    <PL10YT=R  3.865  -0.01   +352  -2bps
              R>                    2    bps  
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.27   0.28   0.32      0
              PRIBOR=>                        
 Hungary              <   0.37    0.5   0.64   0.24
              BUBOR=>                         
 Poland               <   1.78  1.815  1.895   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
    

 (Additional reporting by Radu Marinas and Luiza Ilie in
Bucharest/Petra Vodstrcilova in Prague; Editing by Tom Heneghan)

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