October 3, 2019 / 10:51 AM / 18 days ago

CEE MARKETS-Big swings in Polish assets as EU court rules on FX mortgages

    * EU top court rules in favour of Swiss franc mortgage
holders
    * Verdict could lead to costs for banks
    * Polish banking index falls
    * High volatility in Polish zloty

    By Alan Charlish
    WARSAW, Oct 3 (Reuters) - The Polish zloty
strengthened and banking stocks in central Europe's largest
economy were mixed after the European Union's top court ruled on
Thursday in favour of Polish consumers in a long running dispute
over Swiss franc mortgages.    
    The ruling allows Polish consumers to ask courts to convert
their loans into local currency. Some analysts said the terms of
that conversion were likely to favour consumers, and potentially
lead to costs for banks, although others thought the verdict was
less harsh on lenders than it might have been.
    There were big swings in the zloty and Polish banking stocks
 as traders tried to interpret the ruling.
    "There are sudden moves both ways, the market is not sure
what to do with it," said a Warsaw-based currency dealer, adding
 he was waiting for lawyers' opinions of the verdict.
    Ahead of the ruling, the zloty strengthened against the euro
to 4.3604 before weakening to 4.3661 and finally settling to
trade at around 4.3441, 0.3% stronger on the day, at 1015 GMT.
    "Given that it (the verdict) is somewhat less harsh than
some investors expected we have appreciation of the zloty," ING
Senior economist Piotr Poplawski said.
    Banking stocks also gained immediately before the verdict,
but Warsaw's WIG Banks index was trading 1.35% lower on
the day at 1015 GMT.
    The worst performers were BNP Paribas Bank Polska
(-7.7%) and Santander Bank Polska (-3.9%).
    "We think the decision creates uncertainty about the overall
amount and timing of potential bank losses but also that it
represents less of an immediate risk about the banking system as
a whole," said Morgan Stanley analyst Georgi Deyanov in a note.
    In Romania, the central bank kept its key interest rate
unchanged at 2.50%, as expected. The leu was little
changed after the decision.
    Other currencies in the region were slightly stronger, with
the Czech crown gaining 0.09% and the Hungarian forint
 up 0.17%.
    Benchmark Polish 10-year yields dropped 2.6
basis points to 1.982%, while Czech 10-year yields
fell 2.7 basis points to 1.324%.
    "Polish government bonds follow core markets, follow U.S.
treasuries, follow German bunds and these are lower across the
curve," said Pekao economist Arkadiusz Urbanski, pointing to a
series of weaker U.S. macroeconomic figures released recently.
    
                  CEE      SNAPSH   AT                   
                  MARKETS  OT      1212            
                                   CET             
                           CURREN                        
                           CIES                    
                           Latest  Previo  Daily   Change
                                   us              
                           bid     close   change  in
                                                   2019
 EURCZK  Czech    <EURCZK  25.761  25.782   +0.08  -0.21%
 =       crown    =>            0       0       %  
 EURHUF  Hungary  <EURHUF  333.45  333.75   +0.09  -3.71%
 =       forint   =>           00      00       %  
 EURPLN  Polish   <EURPLN  4.3425  4.3584   +0.37  -1.22%
 =       zloty    =>                            %  
 EURRON  Romania  <EURRON  4.7475  4.7464  -0.02%  -1.97%
 =       n leu    =>                               
 EURHRK  Croatia  <EURHRK  7.4160  7.4133  -0.04%  -0.08%
 =       n kuna   =>                               
 EURRSD  Serbian  <EURRSD  117.36  117.46   +0.09   +0.80
 =       dinar    =>           00      00       %       %
         Note:    calculated from          1800          
         daily                             CET     
         change                                    
                                                         
                           Latest  Previo  Daily   Change
                                   us              
                                   close   change  in
                                                   2019
 .PX     Prague            1005.7  1010.0  -0.43%   +1.94
                                1     300               %
 .BUX    Budapes           39728.  39416.   +0.79   +1.51
         t                     70      77       %       %
 .WIG20  Warsaw   <.WIG20  2098.4  2098.2   +0.01  -7.83%
                  >             2       8       %  
 .BETI   Buchare           9421.2  9425.2  -0.04%   +27.6
         st                     4       0              0%
 .SBITO  Ljublja  <.SBITO  862.16  860.16   +0.23   +7.20
 P       na       P>                            %       %
 .CRBEX  Zagreb   <.CRBEX  1932.4  1948.2  -0.81%   +10.5
                  >             7       1              0%
 .BELEX  Belgrad  <.BELEX  745.29  752.64  -0.98%  -2.15%
 15      e        15>                              
 .SOFIX  Sofia    <.SOFIX  564.10  568.53  -0.78%  -5.11%
                  >                                
                           BONDS                         
                           Yield   Yield   Spread  Daily
                           (bid)   change  vs      change
                                           Bund    in
         Czech                                     spread
         Republi                                   
         c                                         
 CZ2YT=           <CZ2YT=  1.3730  0.0000   +214b   +1bps
 RR      2-year   RR>                          ps  
 CZ5YT=           <CZ5YT=  1.1100  -0.043   +192b   -2bps
 RR      5-year   RR>                   0      ps  
 CZ10YT           <CZ10YT  1.3240  -0.027   +190b   +1bps
 =RR     10-year  =RR>                  0      ps  
         Poland                                          
 PL2YT=           <PL2YT=  1.5050  -0.009   +227b   +0bps
 RR      2-year   RR>                   0      ps  
 PL5YT=           <PL5YT=  1.7320  -0.030   +255b   +0bps
 RR      5-year   RR>                   0      ps  
 PL10YT           <PL10YT  1.9820  -0.026   +256b   +1bps
 =RR     10-year  =RR>                  0      ps  
                  FORWARD  RATE    AGREEM                
                                   ENT             
                           3x6     6x9     9x12    3M
                                                   interb
                                                   ank
         Czech    <CZKFRA    2.22    2.15    2.02    2.16
         Rep      ><PRIBO                          
                  R=>                              
         Hungary  <HUFFRA    0.27    0.32    0.35    0.21
                  ><BUBOR                          
                  =>                               
         Poland   <PLNFRA    1.74    1.70    1.67    1.72
                  ><WIBOR                          
                  =>                               
         Note:    are for ask                            
         FRA      prices                           
         quotes                                    
         ****************************************        
         **********************                    
                                                         
    


 (Reporting by Alan Charlish in Warsaw, Radu-Sorin Marinas in
Bucharest and Gergely Szakacs in Budapest; Editing by Mark
Potter)
  
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