September 30, 2016 / 2:11 PM / 10 months ago

CEE MARKETS-Assets fall on Deutsche, Hungarian vote, Romania keeps rates on hold

7 Min Read

* Some currencies, stock indices touch multi-week lows
    * Concern over Deutsche Bank drives decline
    * Hungarian referendum on migrant quotas a source of tension
    * Romanian central bank cuts reserve requirement

 (Adds Polish inflation, Romanian central bank decision to cut
reserve requirements)
    By Sandor Peto
    BUDAPEST, Sept 30 (Reuters) - Central European assets
declined on Friday due to concerns over Deutsche Bank and a
weekend referendum in Hungary about the EU's migrant quotas.
    Financial sector shares led a fall in equities, with the
woes of Deutsche Bank casting a shadow over the
European banking sector. Some energy sector stocks gave up
ground gained after a rise in oil prices this week.
    Prague's stock index led regional losses. It fell 1.2
percent by 1311 GMT, partly driven by 4.3 percent fall of Moneta
Bank. 
    Moneta plunged after GE Capital completed a bookbuild
offering to sell about a quarter of Moneta's share capital.
 
    The forint shed 0.4 percent and the zloty
 0.1 percent against the euro.
    The zloty did not weaken further after Poland's flash
estimate for September showed that annual inflation stayed
negative, at -0.5 percent. 
    Government bonds in the region were mixed. 
    Hungary's 10-year yield rose by 3 basis points to 2.87
percent, but robust demand at Thursday's auction could herald
further gains in the coming weeks, traders said.
    Regional political sentiment is shaky.
    In Sunday's referendum, a strong majority of Hungarian
voters is expected to reject the European Union's migrant
quotas, even though turnout may not be high enough to make the
vote valid.
    Analysts said the outcome could strengthen Prime Minister
Viktor Orban's support at home and embolden him to push even
more vocal anti-immigration policies within the European Union.
    This could fuel tensions between the Visegrad Four - Czechs,
Hungary, Poland and Slovakia - and Germany.
    The group speaks of "flexible solidarity" and want to be
allowed to offset their refusal to take in refugees by offering
more guards and equipment to protect EU's external borders. 
    Relations between Brussels and Warsaw have been tense over
the rule of law in Poland. The paper Dziennik Gazeta Prawna
quoted Prime Minister Beata Szydlo as saying that an EU decision
to suspend Poland's retail tax was a political game.
    "Politics is a negative backdrop ... but the main worry in
markets now is Deutsche Bank," one Budapest-based fixed income
trader said.
    The leu eased 0.1 percent after the Romanian
central bank kept interest rates on hold but cut commercial
banks' minimum reserve requirement for foreign currency to 10
percent from 12 percent.  
    The measure will release an estimated 500 million euros into
the market, but the government could soak it up if it decides to
issue euro-denominated debt.
    
           CEE      SNAP   AT  1511       
           MARKETS  SHOT  CET         
                    CURRENCIES            
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                    bid   clos  chan  in
                          e     ge    2016
 Czech     <EURCZK  27.0  27.0   +0.  -0.0
 crown     =>        220   260   01%    9%
 Hungary   <EURHUF  309.  308.  -0.3  1.53
 forint    =>       9000  7600    7%     %
 Polish    <EURPLN  4.31  4.31  -0.0  -1.3
 zloty     =>         46    06    9%    1%
 Romanian  <EURRON  4.45  4.45   +0.  1.45
 leu       =>         45    55   02%     %
 Croatian  <EURHRK  7.51  7.51  -0.0  1.62
 kuna      =>         75    15    8%     %
 Serbian   <EURRSD  123.  123.   +0.  -1.3
 dinar     =>       1000  2700   14%    2%
 Note:     calcula  prev  clos  1800      
 daily     ted      ious  e at  CET   
 change    from                       
                    STOC                  
                    KS                
                    Late  Prev  Dail  Chan
                    st    ious  y     ge
                          clos  chan  in
                          e     ge    2016
 Prague             863.  874.  -1.2  -9.6
                      86    57    2%    7%
 Budapest           2773  2798  -0.8   +15
                    9.08  8.68    9%  .96%
 Warsaw    <.WIG20  1719  1730  -0.6  -7.5
           >         .47   .45    3%    1%
 Buchares           6930  6981  -0.7  -1.0
 t                   .96   .03    2%    5%
 Ljubljan  <.SBITO  741.  742.  -0.1   +6.
 a         P>         71    52    1%   54%
 Zagreb    <.CRBEX  1941  1938   +0.   +14
           >         .16   .72   13%  .89%
 Belgrade  <.BELEX  636.  635.   +0.  -1.2
           15>        30    84   07%    1%
 Sofia     <.SOFIX  504.  510.  -1.0   +9.
           >          85    16    4%   54%
                    BOND                  
                    S                 
                    Yiel  Yiel  Spre  Dail
                    d     d     ad    y
                    (bid  chan  vs    chan
                    )     ge    Bund  ge
                                      in
 Czech                                spre
 Republic                             ad
   2-year  <CZ2YT=  -0.5  -0.0   +01   +1b
           RR>        65    07  4bps    ps
   5-year  <CZ5YT=  -0.1  -0.0   +04   +2b
           RR>        97    02  0bps    ps
           <CZ10YT  0.25     0   +04   +3b
 10-year   =RR>                 0bps    ps
 Poland                                   
   2-year  <PL2YT=  1.76  0.01   +24   +3b
           RR>         2     3  6bps    ps
   5-year  <PL5YT=  2.34  0.00   +29   +2b
           RR>         6     2  4bps    ps
           <PL10YT  2.91  0.01   +30   +5b
 10-year   =RR>        4     3  7bps    ps
           FORWARD  RATE  AGREEMENT       
                    3x6   6x9   9x12  3M
                                      inte
                                      rban
                                      k
 Czech     <CZKFRA  0.28  0.25  0.22     0
 Rep       ><PRIBO                    
           R=>                        
 Hungary   <HUFFRA  0.74  0.71  0.72  0.88
           ><BUBOR                    
           =>                         
 Poland    <PLNFRA  1.71  1.67  1.65  1.71
           ><WIBOR           5     5  
           =>                         
 Note:     are for                        
 FRA       ask                        
 quotes    prices                     
 *****************************************
 *********************
 

 (Additional reporting by Luiza Ilie in Bucharest; Editing by
Alison Williams)

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