May 11, 2020 / 9:38 AM / 15 days ago

CEE MARKETS-Stocks rise on optimism over economic reopening, GDP data eyed

    By Anita Komuves
    BUDAPEST, May 11 (Reuters) - Central European currencies
were stable and stocks rose on Monday with Budapest
outperforming the region as the gradual lifting of lockdown
measures boosted investor sentiment globally. 
    Regional currencies gained less than 0.1% versus the euro on
Monday. The zloty, the crown and the forint have all suffered
since the coronavirus pandemic brought economic activity to a
virtual halt.  
    Analysts expect preliminary first-quarter gross domestic
product data, to be published this week in the region, to be
closely eyed by investors in the region's markets for clues
about the extent of economic damage caused by the coronavirus
outbreak. 
    The International Monetary Fund forecasts that economies in
the region will contract by 3% to 7% this year due to the
pandemic.
    
    ** For an interactive graphic on CEE economic
developments: reut.rs/3exsJHO

   "Domestic readings, if they surprise negatively... may
increase expectations for further fiscal and monetary assistance
in Poland, and thus put pressure on the zloty," PKO Bank wrote
in a note. 
    "Everyone is expecting macro data to be so bad these days
that if data end up being just slightly better than expected,
that will have a positive effect on markets," an FX trader in
Budapest said.
    "The fact that the central bank is closely managing interest
rates in Hungary is also helping the forint," he added.
    Helped by policy tightening by Hungary's previously
ultra-dovish central bank, the forint has outperformed its peers
and regained a significant share of its losses since April 1,
when it hit a record low near 370 to the euro.
    The forint was trading at 349.25 to the euro on
Monday, up 0.03% on the day.
    The forint was also helped last week by the slow start of
the Hungarian central bank's QE program, where the NBH bought 50
billion forints ($155.35 million) worth of government bonds,
half the amount it had set as a maximum of weekly purchases. 
    Central bank Governor Gyorgy Matolcsy said in an interview
on Sunday that the NBH will use the bond-buying scheme only to
the extent necessary.
    According to a Reuters poll, economists expect most central
European currencies to rebound or remain stable over the next 12
months. 
    The Hungarian forint is forecast to be stable while the
Polish zloty is expected to gain 3.3% against the euro. 
    Analysts projected that the Czech crown would gain around
5.0% against the euro. Estimates for the poll were collected
before the Czech central bank delivered a bigger-than-expected
75-basis-point rate cut last Thursday.
    The crown fell after the cut last week, the third in a
series of big reductions. The crown was trading at
27.220 versus the euro on Monday, up 0.06% on the day. 
    Stocks rose on Monday. Prague's blue-chip index gained
1% while both Warsaw and Bucharest were up
0.7%.    
    Budapest equities were up 2.13% and leading gains in the
region as pharma company Richter           outperformed the
wider market. 
    Richter's shares were up 2.46% by 0909 GMT as JP
Morgan raised its target price and changed its recommendation to
overweight from neutral. The company reported an above-forecast
first-quarter profit on Friday.
   

            CEE        SNAPSHOT    AT                         
            MARKETS               0925 CET            
                       CURRENCIE                              
                       S                              
                       Latest     Previous  Daily     Change
                       bid        close     change    in 2020
 Czech                   27.2200   27.2360    +0.06%    -6.57%
 crown                                                
 Hungary                349.2500  349.3700    +0.03%    -5.18%
 forint                                               
 Polish                   4.5460    4.5499    +0.09%    -6.37%
 zloty                                                
 Romanian                 4.8270    4.8280    +0.02%    -0.80%
 leu                                                  
 Croatian                 7.5548    7.5558    +0.01%    -1.45%
 kuna                                                 
 Serbian                117.4700  117.6100    +0.12%    +0.09%
 dinar                                                
 Note:      calculated from                 1800 CET          
 daily                                                
 change                                               
                                                              
                       Latest     Previous  Daily     Change
                                  close     change    in 2020
 Prague                   890.03  881.3400    +0.99%   -20.22%
 Budapest               35535.64  34796.13    +2.13%   -22.89%
 Warsaw                  1617.84   1606.50    +0.71%   -24.75%
 Bucharest               8438.24   8381.20    +0.68%   -15.43%
 Ljubljana                801.10    801.10    +0.00%   -13.48%
 Zagreb                  1542.74   1542.74    +0.00%   -23.53%
 Belgrade   <.BELEX15     661.60    661.60    +0.00%   -17.47%
            >                                         
 Sofia                    448.82    448.82    +0.00%   -21.00%
                                                              
                       Yield      Yield     Spread    Daily
                       (bid)      change    vs Bund   change
                                                      in
 Czech                                                spread
 Republic                                             
   2-year   <CZ2YT=RR     0.2810   -0.0690   +104bps     -9bps
            >                                         
   5-year   <CZ5YT=RR     0.5250   -0.0810   +126bps    -10bps
            >                                         
   10-year  <CZ10YT=R     1.1320    0.0200   +165bps     +1bps
            R>                                        
 Poland                                                       
   2-year   <PL2YT=RR     0.5790    0.0130   +134bps     -1bps
            >                                         
   5-year   <PL5YT=RR     1.0910    0.0290   +183bps     +1bps
            >                                         
   10-year  <PL10YT=R     1.5330   -0.0030   +205bps     -2bps
            R>                                        
            FORWARD                                           
                       3x6        6x9       9x12      3M
                                                      interban
                                                      k
 Czech Rep          <       0.26      0.27      0.29      0.87
            PRIBOR=>                                  
 Hungary            <       1.13      1.08      1.05      1.08
            BUBOR=>                                   
 Poland             <       0.29      0.33      0.36      0.68
            WIBOR=>                                   
 Note: FRA  are for ask prices                                
 quotes                                               
 ***************************************************          
 ***********                                          
 

 (Additional reporting by Alan Charlish in Warsaw, editing by
Larry King)
  
 
 
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