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CEE MARKETS-Currencies rebound, shrug off Polish data, Budapest stocks hit record high
May 19, 2017 / 2:33 PM / 4 months ago

CEE MARKETS-Currencies rebound, shrug off Polish data, Budapest stocks hit record high

    * Global sentiment improves, triggers fx and stocks rebound
    * Czech central banker reiterates gradual rate hikes are
possible
    * Hungarian mortgage scheme less painful to banks than
expected
    * OTP, FHB banks rise boosts Budapest stock index to record
high

 (Adds Polish economic data)
    By Sandor Peto and Jason Hovet
    BUDAPEST/PRAGUE, May 19 (Reuters) - Central European
currencies and stocks rebounded on Friday, with Budapest's stock
index hitting a record high as risk appetite returned in
global markets and a batch of domestic news improved the outlook
of financial sector stocks in the region.
    A Czech central banker reiterated the possibility of gradual
rate hikes and a deal in Hungary about a certified mortgage
lending scheme put less stress on banks' spreads than expected,
boosting the shares of OTP and FHB.

    The crown, the forint and the leu
 firmed 0.2 percent against the euro by 1340 GMT, with
the Czech unit trading at 26.532.
    Czech central bank (CNB) board member Marek Mora said in an
interview in the Hospodarske Noviny daily that the bank should
raise interest rates slowly and gradually, but if the exchange
rate does not rise, it may lead to a faster path.
    The CNB is the first central bank in the region to flag that
a reversal of years of interest rate cuts may be near.
    Early last month, the bank opened the way for a firming of
the crown, which can push inflation lower, removing a cap which
had kept the currency weaker than 27 since 2013.
    The currency has firmed less than investors, who have bought
tens of billions of euros worth of crowns, had expected.
    "If the koruna (crown) does not significantly strengthen to
less than EUR/CZK 26 we may see the CNB decide - for the first
time in almost 10 years - to hike its 2W (two-week) repo rate
this year," Komercni analysts said in a note.
    The region's main currencies and stock indices are near
multi-week or even multi-year highs despite a fall this week due
to the worries over U.S. President Donald Trump's future.
    Investors also watch Brazil's corruption crisis and economic
woes.
    Figures released in the region this month have confirmed
that its economies are growing at robust rates, partly fuelled
by surging wages, without signs of a surge in inflation or
budget deficits, at least for now.
    Polish data for April, released on Friday, showed slower
than expected growth in retail sales, industrial output and
wages. 
    The zloty, however, shrugged off the figures and
firmed about half a percent and briefly pierced the 4.2
psychological line against the euro, extending a technical
rebound from levels near the 4.23 support line.
    "I suppose that markets bet that economic upturn would
sustain, which would make MPC (central bank) finally change its
dovish stance," said Piotr Poplawski, senior economist at ING
BSK in Warsaw. 
    
                CEE MARKETS  SNAPSH   AT  1540 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.532  26.572   +0.15   1.79%
                                  0       0       %  
 Hungary                     309.10  309.85   +0.24  -0.09%
 forint                          00      50       %  
 Polish zloty                4.2021  4.2206   +0.44   4.80%
                                                  %  
 Romanian leu                4.5625  4.5696   +0.16  -0.60%
                                                  %  
 Croatian kuna               7.4440  7.4535   +0.13   1.49%
                                                  %  
 Serbian dinar               122.93  123.00   +0.06   0.34%
                                 00      00       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      1018.7  1011.7   +0.70   +10.5
                                  9       1       %      4%
 Budapest                    34798.  34528.   +0.78   +8.73
                                 32      85       %       %
 Warsaw                      2315.4  2295.1   +0.89   +18.8
                                  9       4       %      7%
 Bucharest                   8492.3  8430.3   +0.74   +19.8
                                  0       3       %      6%
 Ljubljana                   784.68  777.16   +0.97   +9.35
                                                  %       %
 Zagreb                      1865.5  1867.1  -0.08%  -6.48%
                                  2       0          
 Belgrade                    738.95  731.38   +1.04   +3.01
                                                  %       %
 Sofia                       658.99  659.51  -0.08%   +12.3
                                                         7%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                    -0.084   0.051   +059b   +2bps
                                                 ps  
   5-year                     0.037    0.05   +039b   +4bps
                                                 ps  
   10-year                    0.877    0.03   +051b   +1bps
                                                 ps  
 Poland                                                    
   2-year                     1.946   0.009   +262b   -2bps
                                                 ps  
   5-year                     2.773   0.007   +312b   -1bps
                                                 ps  
   10-year                    3.339  -0.002   +297b   -2bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.37    0.45    0.55       0
                IBOR=>                               
 Hungary                <BU    0.19    0.24    0.33    0.15
                BOR=>                                
 Poland                 <WI   1.749   1.769   1.809    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
   

 (Additional reporting by Aleksandar Vasovic in Belgrade/Radu
Marinas in Bucharest/Bartosz Chmielewski in Warsaw; Editing by
Toby Davis)
  
 
 

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