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CEE MARKETS-Stocks test multi-year high on earnings, OTP beats forecasts
May 12, 2017 / 9:19 AM / 7 months ago

CEE MARKETS-Stocks test multi-year high on earnings, OTP beats forecasts

    * OTP Bank Q1 earnings beat forecasts, adds to optimism
    * Budapest stocks near record, Bucharest highest since 2008
    * Hungarian debt yields ease on dovish central bank stance

    By Sandor Peto
    BUDAPEST, May 12 (Reuters) - Central Europe's main stock
indices tested multi-year highs on Friday as first-quarter
corporate reports showed a rise in profits and an optimistic
picture about the region's economies.
    Budapest led the gains. Its index rose 0.7 percent by
0832 GMT, approaching record highs, driven by a 2 percent surge
of OTP Bank stocks to 6-week highs of above 8,400
forints.
    OTP has been rising from last week's 5-month lows at 7,724
forints amid hopes for good results. If it sticks above 8,400,
technicals could boost it to 8,800 in two to three weeks,
Equilor brokerage analyst Zoltan Varga said.
    OTP, Central Europe's biggest independent lender, reported a
far bigger than expected jump in first-quarter net profits and
retained an optimistic guidance.
    Several banks and other firms have reported upbeat results
in the region as economies are growing at robust 3-4 percent
annual rates and the process of cleaning bad loans from lenders'
portfolios advances.
    The index of Warsaw-listed banks hit 2-year highs
earlier this week. 
    Warsaw's main index is also near 2-year highs, but its gains
were trimmed on Friday by more than 5 percent fall in the stocks
of Poland's biggest power group PGE.
    It retreated from 6-week highs after PGE reported a jump in
net profits as expected, but said that it would freeze dividend
payouts for 2016-2018 to retain funding for its development
programme.
    Bucharest's stock index reached its highest levels
for almost a decade.
    Regional currencies were rangebound, with the dinar
 firming slightly as the Serbian central bank was
meeting and it was expected to keep the region's highest
benchmark rate on hold at 4 percent.
    The forint and the crown traded near one-month highs and the
zloty near two-year highs against the euro.
    Economic growth and good trade and current account balances
mostly support regional currencies even though central banks
have not showed signs that they could start to reverse years of
monetary loosening any time soon.
    Hungarian government bond yields continued to drop by a few
basis points. They have been declining for days, with their
curve becoming flatter, after dovish comments from central bank
deputy governor Marton Nagy at a conference in London, one
trader said.
    Nagy's remarks that the bank may be able to push long-term
BUBOR interbank rates lower showed that the bank, which "already
has the largest dovish monetary conditions impulse" in emerging
markets would not change its stance, Citi Group said in a note.
    "The Central Bank should remain very dovish, but denying any
intention to curb HUF fluctuations," it added.   
             CEE        SNAPS   AT  1032          
             MARKETS    HOT    CET           
                        CURRENCIES                
                        Lates  Previ  Daily  Chang
                        t      ous           e
                        bid    close  chang  in
                                      e      2017
 Czech                  26.56  26.58   +0.1  1.68%
 crown                     00     70     0%  
 Hungary                310.2  310.1  -0.02  -0.46
 forint                   500    750      %      %
 Polish                 4.216  4.219   +0.0  4.44%
 zloty                      5      3     7%  
 Romanian               4.545  4.548   +0.0  -0.22
 leu                        0      3     7%      %
 Croatian               7.428  7.426  -0.02  1.71%
 kuna                       0      5      %  
 Serbian                123.0  123.1   +0.0  0.24%
 dinar                    500    550     9%  
 Note:       calculate  previ  close  1800        
 daily       d from     ous    at     CET    
 change                                      
                        STOCK                     
                        S                    
                        Lates  Previ  Daily  Chang
                        t      ous           e
                               close  chang  in
                                      e      2017
 Prague                 1016.  1012.   +0.3   +10.
                           08     81     2%    25%
 Budapest               34090  33858   +0.6   +6.5
                          .17    .88     8%     2%
 Warsaw                 2368.  2364.   +0.1   +21.
                           55     93     5%    59%
 Bucharest              8411.  8365.   +0.5   +18.
                           05     02     5%    72%
 Ljubljana              782.4  789.1  -0.84   +9.0
                            5      1      %     4%
 Zagreb                 1889.  1886.   +0.1  -5.27
                           80     49     8%      %
 Belgrade    <.BELEX15  728.9  729.1  -0.03   +1.6
             >              3      3      %     1%
 Sofia                  654.7  654.2   +0.0   +11.
                            5      5     8%    65%
                        BONDS                     
                        Yield  Yield  Sprea  Daily
                                      d      
                        (bid)  chang  vs     chang
                               e      Bund   e in
 Czech                                       sprea
 Republic                                    d
   2-year    <CZ2YT=RR  -0.04  -0.04   +062  -4bps
             >              6      6    bps  
   5-year    <CZ5YT=RR  -0.02      0   +028   +1bp
             >              8           bps      s
   10-year   <CZ10YT=R  0.819      0   +041   +1bp
             R>                         bps      s
 Poland                                           
   2-year    <PL2YT=RR   1.97  0.003   +264   +1bp
             >                          bps      s
   5-year    <PL5YT=RR  2.776  -0.02   +309  -1bps
             >                          bps  
   10-year   <PL10YT=R  3.312  -0.04   +290  -4bps
             R>                    7    bps  
             FORWARD    RATE   AGREEMENT          
                        3x6    6x9    9x12   3M
                                             inter
                                             bank
 Czech Rep           <   0.34   0.42   0.52      0
             PRIBOR=>                        
 Hungary             <   0.19   0.25   0.33   0.16
             BUBOR=>                         
 Poland              <  1.765  1.785   1.82   1.73
             WIBOR=>                         
 Note: FRA   are for                              
 quotes      ask                             
             prices                          
 *************************************************
 *************
 
 (Reporting by Sandor Peto; Editing by Tom Heneghan)
  
 
 

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