February 10, 2017 / 10:25 AM / 5 months ago

CEE MARKETS-Stocks surge on earnings, Kaczynski comments on banks

7 Min Read

* Polish party leader comments softer on banks over CHF
loans
    * Banks boost Warsaw stock index to 17-month high
    * Czech Moneta is latest CEE bank reporting good Q4 earnings
    * Stocks at 14-month high in Prague, 19 in Bucharest

    By Sandor Peto and Agnieszka Barteczko
    BUDAPEST/WARSAW, Feb 10 (Reuters) - Central European stocks
hit their highest levels for more than a year on Friday due to
strong earnings from some banks and reassuring comments from
Poland's ruling party over the sector.
    The mood in global stock markets remained supportive after a
rally in Asia over upbeat Chinese trade data and in the Unied
States as new president Donald Trump pledged tax incentives to
business.
    Polish assets also got help in the past weeks from data that
may signal some pick-up in economic growth and expectations for
central bank rate hikes in 2018 that could lift bank's revenues.
    Jaroslaw Kaczynski, the head of the Polish ruling party PiS
said Swiss franc borrowers should turn to court due to the pain
of increased repayments rather than expect the government to
impose a settlement on banks. 
    Kaczynski and his party have had little love for banks since
assuming power in late 2015.
    "This is a significant change in rhetoric. Some investors
could think that banks' costs related to the Swiss-franc
portfolio would be lower," Kamil Stolarski, bank analyst at
Haitong Bank said. 
    Warsaw's blue chip stock index has fully recovered
from last year's slump and touched a 17-month high on Friday,
driven by banks including PKO BP which rose 2.8
percent. BZW BK and mBank rose over 3 percent.
    The zloty firmed 0.3 percent against the euro by
0915 GMT.
    Similar to Warsaw, Prague's index rose 0.8 percent,
touching its highest level since December 2015, with Komercni
Banka rising 2.5 percent. Bucharest's index 
set a 19-month high and Budapest was near record highs.
    Czech Moneta Money Bank shares jumped to a record
high, rising about 5 percent, reported fourth-quarter profit
above expectations on Friday and surprised the market with a
high 9.8 crown dividend proposal. 
    New Czech data showed a rise in annual inflation to 2.2
percent in January.
    December figures which showed that inflation rose to the
central bank's 2 percent inflation target had boosted
speculation that the bank could soon remove its cap which has
kept the crown weaker than 27 against the euro since 2013.
    The crown's implied exchange rate in forwards deals did not
indicate a surge in demand for the crown similar to what
happened a month ago, forcing the bank to buy billions of euros
in the market to defend the cap. 
    The implied rate in six-month forwards contracts was at
26.8274 at 0934 GMT, down from 26.8055 at Thursday's close.
    
              CEE        SNAPS   AT  1015          
              MARKETS    HOT    CET           
                         CURRENCIES                
                         Lates  Previ  Daily  Chang
                         t      ous           e
                         bid    close  chang  in
                                       e      2017
 Czech crown             27.02  27.02   +0.0  -0.05
                            00     20     1%      %
 Hungary                 308.7  308.3  -0.14  0.02%
 forint                    500    150      %  
 Polish                  4.304  4.317   +0.3  2.32%
 zloty                       0      0     0%  
 Romanian                4.498  4.496  -0.04  0.81%
 leu                         5      8      %  
 Croatian                7.470  7.468  -0.03  1.14%
 kuna                        0      0      %  
 Serbian                 123.8  123.9   +0.0  -0.42
 dinar                     700    700     8%      %
 Note: daily  calculate  previ  close  1800        
 change       d from     ous    at     CET    
                         STOCK                     
                         S                    
                         Lates  Previ  Daily  Chang
                         t      ous           e
                                close  chang  in
                                       e      2017
 Prague                  961.2  953.4   +0.8   +4.3
                             5      6     2%     0%
 Budapest                33096  32949   +0.4   +3.4
                           .71    .08     5%     2%
 Warsaw                  2149.  2132.   +0.8   +10.
                            99     40     2%    37%
 Bucharest               7677.  7627.   +0.6   +8.3
                            02     44     5%     6%
 Ljubljana               757.3  750.2   +0.9   +5.5
                             1      4     4%     4%
 Zagreb                  2175.  2176.  -0.05   +9.0
                            25     26      %     4%
 Belgrade     <.BELEX15  701.6  705.2  -0.51  -2.19
              >              6      6      %      %
 Sofia                   603.8  603.1   +0.1   +2.9
                             2      4     1%     7%
                         BONDS                     
                         Yield  Yield  Sprea  Daily
                                       d      
                         (bid)  chang  vs     chang
                                e      Bund   e in
 Czech                                        sprea
 Republic                                     d
   2-year     <CZ2YT=RR  -0.64  -0.07   +013  -6bps
              >              9           bps  
   5-year     <CZ5YT=RR  0.015  -0.03   +045  -4bps
              >                     7    bps  
   10-year    <CZ10YT=R  0.468  -0.01   +015  -3bps
              R>                    7    bps  
 Poland                                            
   2-year     <PL2YT=RR   2.21  0.027   +299   +3bp
              >                          bps      s
   5-year     <PL5YT=RR  3.177   0.06   +361   +6bp
              >                          bps      s
   10-year    <PL10YT=R  3.838  0.046   +352   +4bp
              R>                         bps      s
              FORWARD    RATE   AGREEMENT          
                         3x6    6x9    9x12   3M
                                              inter
                                              bank
 Czech Rep            <   0.25   0.24   0.27      0
              PRIBOR=>                        
 Hungary              <   0.36   0.49   0.62   0.25
              BUBOR=>                         
 Poland               <  1.765  1.795   1.91   1.73
              WIBOR=>                         
 Note: FRA    are for                              
 quotes       ask                             
              prices                          
 **************************************************
 ************
 
 (Reporting by Sandor Peto; Editing by Toby Chopra)

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