January 2, 2019 / 11:03 AM / 6 months ago

CEE MARKETS-Currencies and stocks ease as Czech and Polish PMIs fall

    * Warsaw stock index leads declines 
    * Hungarian and Polish bond yields plunge in thin trade

    By Sandor Peto
    BUDAPEST, Jan 2 (Reuters) - Central European currencies and
stocks fell on Wednesday after data showed that Czech and Polish
manufacturing activity had dropped to multi-year lows.
    The Polish purchasing managers' index dipped deeper below
the neutral 50-point mark to 47.6 in December from 49.5 in
November, reaching its lowest since April 2013. 
    The Czech index dropped to a worse than expected 49.7 from
51.8, taking it to the lowest level since the summer of 2016.
    Regional currencies eased even before the figures as China's
manufacturing index fell below 50 and prompted a 1.9 percent
decline for MSCI's broadest index of Asia-Pacific shares outside
Japan.
    Warsaw's blue-chip equities index led losses in the
European Union's eastern wing, while Prague -- the worst
performer among the region's main markets last year with a 9
percent fall -- was flat.
    The forint shed 0.4 percent against the euro to 322.15 by
0959 GMT despite Hungary's PMI ticking up to 54.2 from 53.5.
Traders pointed to a drop in main export market Germany's PMI to
a 33-month low as well as technical factors.
    A slow further weakening is likely this year, with the 
European Central Bank moving closer to tightening policy while
Hungarian interest rates could stay at record lows, one
Budapest-based dealer said.
    Hungarian government bond yields dropped by 8-10 basis
points in illiquid trade, with 10-year paper hitting eight-month
lows at 2.88 percent.
    Poland's corresponding yield fell 9 basis points to 2.736
percent, its lowest level since the summer of 2016.
    The PMI figures suggested that the Polish central bank may
find it difficult to start to increase its record low interest
rates.
    "We know that the German economy disappointed last year and
this will be the element that will continue to drag down our
economy," said Grzegorz Ogonek, economist at Santander Bank
Polska.
    The slowdown in economic growth could, however, be moderate,
to 4 percent from 5 percent, the analyst added.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1059 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.7490   25.7300    -0.07%    -0.16%
 crown      >                                       
 Hungary    <EURHUF=  322.1500  320.8100    -0.42%    -0.33%
 forint     >                                       
 Polish     <EURPLN=    4.3017    4.2910    -0.25%    -0.28%
 zloty      >                                       
 Romanian   <EURRON=    4.6610    4.6542    -0.15%    -0.15%
 leu        >                                       
 Croatian   <EURHRK=    7.4140    7.4100    -0.05%    -0.05%
 kuna       >                                       
 Serbian    <EURRSD=  118.3000  118.3000    +0.00%    +0.00%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                 986.60  986.5600    +0.00%    +0.00%
 Budapest             39051.06  39138.95    -0.22%    -0.22%
 Warsaw                2252.23   2276.63    -1.07%    -1.07%
 Ljubljana  <.SBITOP    805.06    804.26    +0.10%    +0.10%
            >                                       
 Zagreb                1741.59   1748.81    -0.41%    -0.41%
 Sofia                  590.76    594.46    -0.62%    -0.62%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.6280   -0.0210   +226bps     +2bps
            R>                                      
   5-year   <CZ5YT=R    1.8290    0.0210   +216bps     +8bps
            R>                                      
   10-year  <CZ10YT=    1.9150    0.0020   +174bps     +8bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.3320   -0.0140   +196bps     +3bps
            R>                                      
   5-year   <PL5YT=R    2.1860   -0.1080   +252bps     -5bps
            R>                                      
   10-year  <PL10YT=    2.7250   -0.1210   +255bps     -5bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.02      2.08      2.07      2.01
            <PRIBOR=                                
            >                                       
 Hungary                  0.31      0.58      0.81      0.00
                                                    
 Poland                   1.74      1.74      1.75      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 *************************************************          
 *************                                      
 
 (Additional reporting by Robert Muller in Prague and Anna
Wlodarczak-Semczuk in Warsaw
Editing by David Goodman)
  
 
 
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