Reuters logo
CEE MARKETS-Debt upgrade, peace with banks help Hungary outperform region
December 30, 2016 / 11:51 AM / 9 months ago

CEE MARKETS-Debt upgrade, peace with banks help Hungary outperform region

By Marton Dunai
    BUDAPEST, Dec 30 (Reuters) - Hungarian markets far
outperformed regional peers in 2016 as ratings agencies restored
the country's investment grade status and its improving economic
outlook lifted shares and the forint, while regional peers
battled waning market confidence and political problems.
    Against a jittery international backdrop that included the
surprise vote by Britain to leave the European Union and Donald
Trump's victory in the U.S. Presidential election, regional
differences marked Budapest as a winner.
    Hungarian shares rose by a third in 2016, hovering
just off a fresh all-time high of 32,040 on the last trading
daay of the year. All blue chips benefited from sound
fundamentals but the improvement in the country's financial
sector helped the index the most.
    Relations improved markedly between banks and the government
of Prime Minister Viktor Orban, a keen user of unorthodox and
often unexpected economic policy in the past. A heavy bank tax
was eased after a landmark agreement in 2015.
    Banks produced their best year in recent memory in 2016,
with most of them returning to profits after years of heavy
losses. They expect weaker profit but growing lending in 2017,
the country's top banker told Reuters. 
    Shares of Hungary's biggest lender, OTP Bank, rose
40 percent this year.
    Banks, meanwhile, dragged lower the Prague Stock Exchange's
main index, which lost 3.8 percent in 2016, marking its
lowest close since 2011. 
    The region's most liquid market in Poland added 5
percent this year but remains 25 percent below its 2007 all-time
high.
    The forint also benefited, adding 1.3 percent this year,
versus a 3.8 percent drop by the zloty and a broadly flat Czech
crown.
    Hungary has been bolstered by three upgrades to its debt
rating which returned the country to investment grade and helped
it weather the storm on international markets better than peers.
    The country's benchmark 10-year bond trades near recent
highs, while Polish paper has yet to recover from an
international sell-off that began on bets for an interest rate
hike in the U.S. and continued on Trump's surprise victory.
    The zloty and Polish bonds have also suffered from conflict
between Poland's new nationalist-minded government and European
institutions, as well as market worries over political stability
and the country's fiscal standing.
    The crown remained in the intervention regime by the Czech
central bank, preventing it from strengthening beyond the level
of 27 crows per euro for the whole year. The currency hovered
just above that level for most of the year.
    
    
               CEE MARKETS  SNAPSH   AT  0953 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2016
 Czech crown                27.020  27.021   +0.00  -0.08%
                                 0       0       %  
 Hungary                    311.03  310.80  -0.07%   1.16%
 forint                         00      00          
 Polish zloty               4.4180  4.4114  -0.15%  -3.62%
 Romanian leu               4.5290  4.5350   +0.13  -0.22%
                                                 %  
 Croatian                   7.5620  7.5615  -0.01%   1.02%
 kuna                                               
 Serbian                    123.38  123.59   +0.17  -1.55%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2016
 Prague                     920.21  919.58   +0.07  -3.78%
                                                 %  
 Budapest                   31916.  31847.   +0.22   +33.4
                                99      87       %      3%
 Warsaw                     1947.3  1946.3   +0.05   +4.75
                                 7       2       %       %
 Bucharest                  7075.0  7072.2   +0.04   +1.01
                                 9       8       %       %
 Ljubljana                  706.73  711.28  -0.64%   +1.52
                                                         %
 Zagreb                     1989.6  1991.3  -0.09%   +17.7
                                 3       3              6%
 Belgrade                   716.66  714.72   +0.27   +11.2
                                                 %      7%
 Sofia                      586.42  586.51  -0.02%   +27.2
                                                        3%
                            BONDS                         
                            Yield   Yield   Spread  Daily
                            (bid)   change  vs      change
                                            Bund    in
 Czech                                              spread
 Republic                                           
   2-year                   -0.878   0.014  -009bp   +2bps
                                                 s  
   5-year                   -0.227   0.015   +032b   +0bps
                                                ps  
   10-year                   0.463  -0.016   +028b   -2bps
                                                ps  
 Poland                                                   
   2-year                    1.989   0.003   +278b   +1bps
                                                ps  
   5-year                    2.803   0.004   +335b   -1bps
                                                ps  
   10-year                    3.55   0.003   +337b   +0bps
                                                ps  
               FORWARD      RATE    AGREEMENT             
                            3x6     6x9     9x12    3M
                                                    interb
                                                    ank
 Czech Rep             <PR    0.28    0.13    0.22       0
               IBOR=>                               
 Hungary               <BU    0.37    0.41    0.49    0.37
               BOR=>                                
 Poland                <WI    1.75    1.77   1.795    1.73
               BOR=>                                
 Note: FRA     are for ask                                
 quotes        prices                               
 *********************************************************
 *****
    

 (Reporting by regional bureaux; Editing by Toby Chopra)

Our Standards:The Thomson Reuters Trust Principles.
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below