May 20, 2019 / 2:06 PM / 4 months ago

CEE MARKETS-Stocks join wider European fall, forint remains fragile

    * Stocks track German fall
    * Budapest, Prague set multi-month lows 
    * Forint near 9-month low before May 28 c.bank meeting

 (Recasts with losses in stocks)
    By Sandor Peto
    BUDAPEST, May 20 (Reuters) - Central European stocks fell on
Monday amid souring market sentiment after German chipmaker
Infineon halted shipments to Huawei Technologies in the face of
a U.S. crackdown on the Chinese firm, and Ryanair issued
a profit warning.
    While Frankfurt's main stock index fell 1.8%, Prague
 shed 0.6%, Budapest 0.7% and Prague shed 0.6%
and Warsaw 0.9% by 1300 GMT.
    Budapest's index hit its lowest level since early January
after slipping last week below the 40,000-point psychological
level.
    "The index looks quite oversold," Erste analysts said in a
note, adding that a turnaround may be close. 
    As the European mood deteriorated on Monday, the index was
knocked further by the shares of OTP Bank.
    OTP fell 1.7 percent to below the psychologically sensitive
level of 12,000 forints, and the next support level is at 11,600
forints, Equilor analyst Zoltan Varga said.
    Prague's main index touched a 3-and-1/2-month low, driven by
a 4.3 percent decline in the stocks of Vienna-based Erste group
 after the bank paid out a dividend.
    Vienna stocks fell overall following the collapse of
the Austrian coalition government.
    Regional currencies firmed mildly as the euro also
regained some ground.
    The forint underperformed the zloty
which gained 0.2 percent to 4.2966, piercing the 4.3 level and
its 200-day moving average.
    The forint firmed a shade to 326.1 versus the euro, but
stayed near Friday's nine-month lows.
    It remains fragile as the Hungarian central bank is expected
not to tighten policy at its May 28 meeting despite a rise in
inflation across the region this year, market participants said.
    Some investors sell the currency to test if the NBH will
change its rhetoric if the forint approaches its record lows
near 330, Budapest-based dealers said. 
    "The question is if they have a pain threshold in terms of a
weaker forint," one dealer said.
    The NBH has said that it would make policy changes only at
its meetings where it discusses its quarterly inflation report.
The next report is due in June.
    It has also said that it expects inflation, which came in at
3.9% in April, to retreat late this year.
    Poland's inflation has also increased, but at 2.2% it
remains well within the central bank's (NBP) 1.5-3.5% target
range.
    Strong first-quarter economic growth figures released across
the region last week did not prompt NBP Governor Adam Glapinski,
who spoke after the bank's meeting on Wednesday, to change his
prediction that rates could stay unchanged for years.
      
            CEE       SNAPSHOT   AT                         
            MARKETS             1500 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.7630   25.7650    +0.01%    -0.22%
 crown      >                                       
 Hungary    <EURHUF=  326.1000  326.3000    +0.06%    -1.54%
 forint     >                                       
 Polish     <EURPLN=    4.2966    4.3039    +0.17%    -0.16%
 zloty      >                                       
 Romanian   <EURRON=    4.7590    4.7625    +0.07%    -2.21%
 leu        >                                       
 Croatian   <EURHRK=    7.4260    7.4260    +0.00%    -0.22%
 kuna       >                                       
 Serbian    <EURRSD=  117.8500  117.9500    +0.08%    +0.38%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1044.86  1050.750    -0.56%    +5.91%
                                       0            
 Budapest             39586.19  39877.82    -0.73%    +1.14%
 Warsaw                2165.09   2184.35    -0.88%    -4.90%
 Bucharest             8225.81   8223.72    +0.03%   +11.41%
 Ljubljana  <.SBITOP    866.03    869.50    -0.40%    +7.68%
            >                                       
 Zagreb                1857.32   1864.51    -0.39%    +6.20%
 Belgrade   <.BELEX1    733.41    732.14    +0.17%    -3.71%
            5>                                      
 Sofia                  570.14    568.87    +0.22%    -4.09%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.5920   -0.1790   +224bps    -18bps
            R>                                      
   5-year   <CZ5YT=R    1.6780    0.0130   +219bps     +1bps
            R>                                      
   10-year  <CZ10YT=    1.8320   -0.0050   +192bps     -2bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6800   -0.0340   +233bps     -3bps
            R>                                      
   5-year   <PL5YT=R    2.2630   -0.0060   +277bps     -1bps
            R>                                      
   10-year  <PL10YT=    2.8960    0.0030   +299bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.22      2.22      2.18      2.20
            <PRIBOR=                                
            >                                       
 Hungary                  0.35      0.52      0.69      0.19
                                                    
 Poland                   1.74      1.75      1.76      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
    

 (Reporting by Sandor Peto; Editing by Susan Fenton and Gareth
Jones)
  
 
 
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