February 21, 2017 / 3:05 PM / 5 months ago

CEE MARKETS-Stock rally continues, Bucharest index sets 9-year high

7 Min Read

    * Bucharest stocks at 9-year high, Banca Transilvania record
high
    * Budapest shares set record high again, driven by OTP Bank
    * Warsaw stocks hits 18-month high, Prague highest since Dec
2015
    * Czech stocks shrug off plan for higher tax for big
companies

 (Adds Czech tax plan, forint rise)
    By Sandor Peto
    BUDAPEST, Feb 21 (Reuters) - Bucharest stocks hit a 9-year
high on Tuesday, driven by surging Banca Transilvania
as bank stocks fuelled a rally in Central European equities
markets.
    The region's stocks have tracked the gains in global
equities as U.S. President Donald Trump has pledged domestic
economic stimulus. The rally lost momentum in the past week, but
regained traction on Tuesday. 
    Warsaw well outperformed Western Europe's main
markets. Rising 2.3 percent by 1419 GMT, it set
a new 18-month highs.
    Budapest, which has been moving in record-high
territory since November, set another record, rising 0.7
percent, with OTP Bank shares gaining 0.9 percent.
    Bucharest rose 1.3 percent to its highest levels
since June 2008.
    It was driven by the gains of OMV Petrom, the
unit of Austrian oil group OMV, and Banca Transilvania
whose shares hit a record high, rising 2.1 percent.
    Petrom reported profits for 2016 last week, after a loss in
2015.
    Banca Transilvania shares have been rising since it reported
its results last week. Net profits fell last year after a
one-off surge in 2015, but other indicators, including the ratio
of non-performing loans, improved.
    Romania's banking sector profits mildly dropped last year to
4.2 billion lei ($981.19 million), but the negative impact of
two bills launched last year, including one on the conversion of
Swiss franc loans, will be less than expected, Raiffeisen
analyst Silvia Rosca said.
    Banks' prospects have improved across the region.
    Hungary cut its bank tax last year. Poland's ruling party
has softened its unfriendly rhetoric over banks and some
investors speculate that a rise in Polish interest rates
expected for 2018 could lift bank revenues.
    In contrast, the ruling Czech Social Democrats put a
proposal for a special tax on banks on its election campaign
agenda earlier this month.
    On Tuesday, they announced an additional plan to raise taxes
on the 600 companies that make over 100 million crowns' pre-tax
profit, to finance tax cuts for smaller firms.
    But it is uncertain whether the Social Democrats can win the
October elections, or gather sufficient support for these plans
as they do not lead opinion polls.
    Czech stocks shrugged off the tax plans. Prague
underperformed regional peers, but firming about 0.2 percent it
touched a 15-month high.
    In currency markets, the forint gained 0.3 percent
against the euro and set a 5-week high at 306.9. 
    
              CEE        SNAPS   AT  1519          
              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     20     1%      %
 Hungary                 307.0  308.0   +0.3  0.59%
 forint                    000    700     5%  
 Polish                  4.307  4.314   +0.1  2.25%
 zloty                       0      8     8%  
 Romanian                4.515  4.522   +0.1  0.43%
 leu                         5      1     5%  
 Croatian                7.452  7.448  -0.05  1.38%
 kuna                        0      5      %  
 Serbian                 123.7  123.8   +0.0  -0.35
 dinar                     800    100     2%      %
 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                  975.0  973.3   +0.1   +5.7
                             1      2     7%     9%
 Budapest                34209  33973   +0.6   +6.8
                           .33    .59     9%     9%
 Warsaw                  2243.  2192.   +2.2   +15.
                            06     79     9%    15%
 Bucharest               7898.  7796.   +1.3   +11.
                            30     14     1%    48%
 Ljubljana               765.6  764.1   +0.1   +6.7
                             5      7     9%     0%
 Zagreb                  2222.  2222.  -0.01   +11.
                            70     97      %    42%
 Belgrade     <.BELEX15  712.0  711.8   +0.0  -0.75
              >              1      1     3%      %
 Sofia                   610.8  608.2   +0.4   +4.1
                             4      8     2%     6%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.51  -0.09   +034  -8bps
              >              3      7    bps  
   5-year     <CZ5YT=RR  0.209  0.006   +068   +0bp
              >                          bps      s
   10-year    <CZ10YT=R  0.678  0.028   +035   +0bp
              R>                         bps      s
 Poland                                            
   2-year     <PL2YT=RR  2.246  0.003   +310   +2bp
              >                          bps      s
   5-year     <PL5YT=RR  3.229  0.059   +370   +5bp
              >                          bps      s
   10-year    <PL10YT=R  3.885  0.047   +356   +2bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.27    0.3   0.35      0
              PRIBOR=>                        
 Hungary              <   0.34   0.54   0.68   0.23
              BUBOR=>                         
 Poland               <  1.765   1.81  1.895   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 ($1 = 4.2805 lei)

 (Additional reporting by Jason Hovet in Prague; Editing by
Robin Pomeroy)
  
 
 

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