May 29, 2017 / 9:13 AM / 2 months ago

CEE MARKETS-Romanian stocks touch 9-year high despite budget worry

7 Min Read

    * Bucharest stock index reaches highest level since Jan 2008
    * Romanian committees to discuss wage hike bill
    * CEE markets are rangebound with UK and U.S. closed

    By Sandor Peto and Luiza Ilie
    BUDAPEST/BUCHAREST, May 29 (Reuters) - Bucharest stocks
touched a new nine-year high on Monday, buoyed by healthy
first-quarter company earnings, despite concerns that wage hikes
and tax cuts will exacerbate Romania's budget deficit.
    Other central European stock indices and currencies were
treading water amid a lack of major domestic news and due to
bank holidays in the United Kingdom and the United States.
    Bucharest's main index was flat at 0839 GMT, a bit
off its morning peak which was also its highest level since
early 2008.
    Committees in the Romanian parliament's lower house are due
to discuss on Monday a bill to lift public sector wages further,
which parliament is expected to pass before its summer recess
starts next month.
    The debate about the bill, "its implementation, timing and
the budget impact, should be closely monitored," Bucharest-based
ING analysts said in a note.
    Romania has led a surge in wages in the region as employers
including governments fight an exodus of young skilled workers
to richer, Western European Union (EU) members.
    January-April budget data have shown a surplus, but the EU,
the International Monetary Fund and the local fiscal council
came out last week to express concern that the government's
policies will lead to a wide deficit.
    Finance Minister Viorel Stefan told Reuters in an interview
late on Friday that the government would press ahead with tax
cuts next year as the economy could continue to grow at a robust
rate of over 5 percent this year.
    Growth in the EU's eastern members has generally picked up
in the first quarter, but central bankers have not appeared
worried over inflation so far.
    Regional stock indices are trading near multi-year highs.
Its main currencies are also trading near multi-month or
multi-year highs, except for the leu which has been
underperforming due to the concerns over the Romanian budget.
    May Purchasing Managers' Index (PMI) figures due on Thursday
are expected to confirm robust growth in the region but may not
boost regional currencies much more.
    "Current strong CE FX rates (with CE currencies among the
strongest emerging market currencies in recent weeks, partially
supported by the ongoing EUR strength) already mirror the
economic improvements visible over the past months," said
Raiffeisen analyst Wolfgang Ernst in a note.
    Regional currencies were mixed, with the zloty
firming slightly against the euro, while the Czech crown
, the forint and the leu shed about
0.1 percent.
     
                CEE MARKETS  SNAPSH   AT  1039 CET         
                             OT                      
                             CURRENCIES                    
                             Latest  Previo  Daily   Change
                                     us              
                             bid     close   change  in
                                                     2017
 Czech crown                 26.480  26.454  -0.10%   1.99%
                                  0       5          
 Hungary                     307.50  307.41  -0.03%   0.43%
 forint                          00      00          
 Polish zloty                4.1820  4.1828   +0.02   5.31%
                                                  %  
 Romanian leu                4.5625  4.5604  -0.05%  -0.60%
 Croatian kuna               7.4190  7.4235   +0.06   1.83%
                                                  %  
 Serbian dinar               122.59  122.69   +0.08   0.62%
                                 00      00       %  
 Note: daily    calculated   previo  close   1800          
 change         from         us      at      CET     
                             STOCKS                        
                             Latest  Previo  Daily   Change
                                     us              
                                     close   change  in
                                                     2017
 Prague                      1013.9  1016.2  -0.22%   +10.0
                                  9       4              2%
 Budapest                    34214.  34358.  -0.42%   +6.91
                                 22      93               %
 Warsaw                      2327.1  2326.2   +0.04   +19.4
                                  3       8       %      7%
 Bucharest                   8650.2  8647.4   +0.03   +22.0
                                  7       9       %      9%
 Ljubljana                   783.11  789.05  -0.75%   +9.13
                                                          %
 Zagreb                      1862.7  1862.0   +0.04  -6.62%
                                  9       7       %  
 Belgrade                    717.62  717.82  -0.03%   +0.03
                                                          %
 Sofia                       658.74  659.50  -0.12%   +12.3
                                                         3%
                             BONDS                         
                             Yield   Yield   Spread  Daily
                             (bid)   change  vs      change
                                             Bund    in
 Czech                                               spread
 Republic                                            
   2-year                    -0.164   0.018   +053b   +2bps
                                                 ps  
   5-year                    -0.057   0.028   +034b   +4bps
                                                 ps  
   10-year                    0.736  -0.023   +041b   -2bps
                                                 ps  
 Poland                                                    
   2-year                     1.924   0.003   +261b   +1bps
                                                 ps  
   5-year                      2.71   0.007   +311b   +2bps
                                                 ps  
   10-year                    3.292   0.002   +296b   +1bps
                                                 ps  
                FORWARD      RATE    AGREEMENT             
                             3x6     6x9     9x12    3M
                                                     interb
                                                     ank
 Czech Rep              <PR    0.36    0.43    0.51       0
                IBOR=>                               
 Hungary                <BU    0.19    0.23    0.29    0.15
                BOR=>                                
 Poland                 <WI   1.753   1.774   1.812    1.73
                BOR=>                                
 Note: FRA      are for ask                                
 quotes         prices                               
 **********************************************************
 ****
 
 (Reporting by Sandor Peto; Editing by Hugh Lawson)
  
 
 

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