* Attention turns local, after lift from French election
* PZU upgrade, Lotos earnings reverse fall of Warsaw stock
* Prospect of low interest rates, margins weigh on OTP Bank
(Adds renewed rise of Polish stocks)
By Sandor Peto
BUDAPEST, April 26 Polish equities climbed to
their highest since mid-2015 on Wednesday as attention turned to
local news in Central European markets and away from the risks
related to France's elections.
Stocks and currencies in the region jumped earlier this week
after centrist Emmanuel Macron won the first round of French
presidential elections on Sunday, lessening the risk of a shift
to the far right.
That rally lost steam by Wednesday. But Warsaw's main
equities index reversed an early decline and rose 1.4
percent by 1257 GMT.
The index was pushed up by insurer PZU, which
surged 5.2 percent after JP Morgan raised its recommendation for
the share to "overweight" from "neutral".
Polish refiner Lotos jumped 9.3 percent, after
reporting 288 percent annual rise in first-quarter earnings
BZW BK stocks, on the other hand, plunged almost 4
percent after Poland's third-biggest bank reported a 19 percent
annual fall in first-quarter profit.
Budapest's main index shed 0.7 percent. The decline was led
by a 1.7 percent drop for OTP, the region's biggest independent
bank, after Hungary's central bank signalled that it intended to
keep interest rates low, eroding banks' interest income.
"Some investors are worried that the central bank may take
measures to reduce bank margins," said Monika Kiss, an analyst
at the Budapest-based brokerage Equilor.
The National Bank of Hungary has said repeatedly that it
wants stronger competition among banks in lending and that bank
mortgage spreads were too high.
"Yesterday's central bank (rate) statement was as expected,
but it underpinned that loose monetary policy will remain and
that is not favourable to banks," Kiss said.
While fresh central bank signals that it may take measures
to tighten banks' margins and the rate statement affected OTP,
Kiss added that the stock "remains a good paper".
The forint and the Czech crown eased by
a quarter of percent against the euro. The crown has so far not
surged in value since the central cap lifted its cap on its
value, 27 to the euro.
"The market is shallow," said a dealer in Prague. "All those
who bought it at 27 are waiting for 26-26.5 to cash out. They
are waiting for the crown to move (higher) with good numbers
from economy, rather than just market swings which last only
couple of hours."
The leu weakened by 0.1 percent. Government
figures late on Tuesday showed a small budget surplus in the
first quarter but did not expel fears of a full-year deficit
overshoot in 2017.
The government plans further public-sector wage increases,
even though it would need to curb spending to keep the deficit
below the European Union's ceiling, 3 percent of gross domestic
"However, the current space for manoeuvre will surely be
more limited by the recent (politically irreversible) wage and
pension hikes, plus new ones to come into force in July 2017,"
Erste analysts said in a note.
CEE SNAPS AT 1457
MARKETS HOT CET
Lates Previ Daily Chang
t ous e
bid close chang in
Czech crown 26.95 26.88 -0.25 0.21%
10 40 %
Hungary 312.7 311.8 -0.28 -1.26
forint 500 750 % %
Polish 4.224 4.222 -0.04 4.25%
zloty 5 8 %
Romanian 4.531 4.527 -0.09 0.09%
leu 0 0 %
Croatian 7.471 7.466 -0.06 1.13%
kuna 0 5 %
Serbian 123.2 123.3 +0.1 0.12%
dinar 000 750 4%
Note: daily calculate previ close 1800
change d from ous at CET
Lates Previ Daily Chang
t ous e
close chang in
Prague 998.2 992.9 +0.5 +8.3
2 8 3% 1%
Budapest 33290 33519 -0.68 +4.0
.35 .07 % 2%
Warsaw 2385. 2353. +1.3 +22.
27 17 6% 45%
Bucharest 8218. 8260. -0.50 +16.
94 33 % 00%
Ljubljana 788.2 777.2 +1.4 +9.8
5 9 1% 5%
Zagreb 1932. 1937. -0.29 -3.15
02 55 % %
Belgrade <.BELEX15 731.5 732.4 -0.12 +1.9
> 6 1 % 8%
Sofia 651.3 653.7 -0.37 +11.
6 6 % 07%
Yield Yield Sprea Daily
(bid) chang vs chang
e Bund e in
2-year <CZ2YT=RR 0.023 0.023 +072 +4bp
> bps s
5-year <CZ5YT=RR 0.245 0.023 +058 +4bp
> bps s
10-year <CZ10YT=R 0.991 -0.03 +063 -2bps
2-year <PL2YT=RR 1.985 0.003 +268 +2bp
> bps s
5-year <PL5YT=RR 2.897 -0.01 +323 +0bp
> 8 bps s
10-year <PL10YT=R 3.488 0.027 +313 +4bp
R> bps s
FORWARD RATE AGREEMENT
3x6 6x9 9x12 3M
Czech Rep < 0.31 0.37 0.46 0
Hungary < 0.23 0.33 0.42 0.16
Poland < 1.753 1.785 1.838 1.73
Note: FRA are for
(Additional reporting by Luiza Ilie in Bucharest, Jason Hovet
in Prague, Marcin Goclowski in Warsaw; Editing by Larry King)