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CEE MARKETS-Budapest stocks hit record high, Czechs mull rate hike odds
May 19, 2017 / 9:42 AM / 7 months ago

CEE MARKETS-Budapest stocks hit record high, Czechs mull rate hike odds

    * Global sentiment improves, triggers fx and stocks rebound
    * Czech central bankers 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

    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.
    A batch of domestic news also 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.
    The forint and the leu firmed 0.2
percent against the euro by 0853 GMT, the zloty gained
0.3 percent and the Czech crown 0.1 percent.
    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 a lack of
exchange rate rise 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.
    It traded at 26.558 to the euro.
    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, a fixed income trader said.
    "If the trouble in Latin America is big, investors may sell
assets here (in Central Europe) as well, because these markets
remain liquid," the trader said. "If the trouble is not so big,
they may even channel funds here."
    The latest data from the region confirmed that its economies
growing at robust rates, partly fuelled by surging wages,
without signs of a surge in inflation or budget deficits, at
least for now.
    Hungary's central bank launched a set of measures to boost
competition in recovering mortgage lending. The maximum 350
basis point lending spread in the voluntary scheme was below
earlier hints of a more painful 250 basis points.
    A jump in the shares of OTP Bank and mortgage
lender FHB boosted Budapest's stock index to a record
high.    
               CEE MARKETS  SNAPSH   AT  1053 CET         
                            OT                      
                            CURRENCIES                    
                            Latest  Previo  Daily   Change
                                    us              
                            bid     close   change  in
                                                    2017
 Czech crown                26.558  26.572   +0.05   1.69%
                                 0       0       %  
 Hungary                    309.15  309.85   +0.23  -0.11%
 forint                         00      50       %  
 Polish zloty               4.2069  4.2206   +0.32   4.68%
                                                 %  
 Romanian leu               4.5605  4.5696   +0.20  -0.56%
                                                 %  
 Croatian                   7.4535  7.4535   +0.00   1.36%
 kuna                                            %  
 Serbian                    122.89  123.00   +0.09   0.37%
 dinar                          00      00       %  
 Note: daily   calculated   previo  close   1800          
 change        from         us      at      CET     
                            STOCKS                        
                            Latest  Previo  Daily   Change
                                    us              
                                    close   change  in
                                                    2017
 Prague                     1015.8  1011.7   +0.41   +10.2
                                 3       1       %      2%
 Budapest                   34736.  34528.   +0.60   +8.54
                                55      85       %       %
 Warsaw                     2305.2  2295.1   +0.44   +18.3
                                 9       4       %      5%
 Bucharest                  8464.7  8430.3   +0.41   +19.4
                                 5       3       %      7%
 Ljubljana                  786.06  777.16   +1.15   +9.54
                                                 %       %
 Zagreb                     1864.1  1867.1  -0.16%  -6.55%
                                 6       0          
 Belgrade                   738.63  731.38   +0.99   +2.96
                                                 %       %
 Sofia                      658.96  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   +060b   +4bps
                                                ps  
   5-year                    0.068   0.082   +043b   +8bps
                                                ps  
   10-year                   0.836   -0.01   +047b   -2bps
                                                ps  
 Poland                                                   
   2-year                    1.957   0.009   +264b   -1bps
                                                ps  
   5-year                    2.784   0.018   +314b   +1bps
                                                ps  
   10-year                   3.343   0.001   +298b   -1bps
                                                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    0.34    0.15
               BOR=>                                
 Poland                <WI    1.76    1.79    1.82    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)
  
 
 

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