March 3, 2020 / 10:48 AM / a month ago

CEE MARKETS-Stocks rise as central banks mull action over coronavirus

    * Markets await results of G7 conference call
    * Forint steady as carry trade positions are unwound

    By Anita Komuves
    BUDAPEST, March 3 (Reuters) - Central European stock indexes
extended their gains on Tuesday as global markets rebound from
last week's losses after several central bank policymakers
indicated willingness to implement steps to ease the economic
effect of the coronavirus.
    Prague's main index led gains by adding 2.9%, while
Budapest was up 2.6%. Equities in Bucharest and
Warsaw also added more than 2%. 
    Markets were looking forward to the results of a conference
call of G7 finance ministers and central bank governors later on
Tuesday to discuss measures to deal with the coronavirus.
    However, the draft of the statement does not specifically
call for new government spending or coordinated interest rate
cuts, a G7 official told Reuters on Tuesday.
    Hungarian central bank deputy governor Mihaly Patai said on
Monday it was hard to predict the economic impact of the
coronavirus in Hungary, adding that for now he did not expect
the spread of the virus to have an impact on monetary policy.
    "Stock market rallies show that some people believe monetary
and fiscal measures suggested by policymakers will be able to
soften the economic effects of the coronavirus," a trader in
Budapest said.
    Currencies, stock markets and bond yields in the CEE region
followed the risk-off sentiment in global markets last week,
with the exception of the Hungarian forint, the dealer said. 
    The Hungarian forint traded at 337.40 to the euro
Tuesday morning, 0.22% stronger on the day and well off a recent
record low of 340.60 against the euro.
    Many investors have closed carry-trade positions in the past
few days, which prevented the forint to reach fresh lows and
allowed it to outperform regional peers in the past few
sessions, the dealer said. 
    Investors have bought higher-yielding assets using cheaper
forints, weakening the unit, as the Hungarian central bank has
held interest rates at the lowest level in Central Europe. 
    To prevent the weak forint from boosting inflation,
Hungary's central bank has tightened interbank liquidity in
recent weeks, leading to higher interbank rates. At a weekly
tender on Monday the bank did not tighten liquidity further.

    Elsewhere in the region, the Czech economy expanded by 0.3%
on a quarterly basis in the fourth quarter of 2019 on the back
of domestic demand, a touch faster than preliminary estimates.

    
                   CEE      SNAPSHO   AT                      
                   MARKETS  T        0959              
                                     CET               
                            CURRENC                           
                            IES                        
                            Latest   Previou  Daily    Change
                                     s                 
                            bid      close    change   in 2020
 EURCZK  Czech     <EURCZK  25.4780  25.5300   +0.20%   -0.18%
 =       crown     =>                                  
 EURHUF  Hungary   <EURHUF  337.400  338.150   +0.22%   -1.85%
 =       forint    =>             0        0           
 EURPLN  Polish    <EURPLN   4.3178   4.3202   +0.06%   -1.42%
 =       zloty     =>                                  
 EURRON  Romanian  <EURRON   4.8080   4.8090   +0.02%   -0.41%
 =       leu       =>                                  
 EURHRK  Croatian  <EURHRK   7.4850   7.4805   -0.06%   -0.53%
 =       kuna      =>                                  
 EURRSD  Serbian   <EURRSD  117.520  117.510   -0.01%   +0.04%
 =       dinar     =>             0        0           
         Note:     calculated from            1800            
         daily                                CET      
         change                                        
                                                              
                            Latest   Previou  Daily    Change
                                     s                 
                                     close    change   in 2020
 .PX     Prague             1013.50  985.130   +2.88%   -9.15%
                                           0           
 .BUX    Budapest           42623.5  41537.2   +2.62%   -7.51%
                                  4        0           
 .WIG20  Warsaw    <.WIG20  1850.75  1807.70   +2.38%  -13.92%
                   >                                   
 .BETI   Buchares           9651.94  9452.51   +2.11%   -3.26%
         t                                             
 .SBITO  Ljubljan  <.SBITO   909.96   893.90   +1.80%   -1.72%
 P       a         P>                                  
 .CRBEX  Zagreb    <.CRBEX  1890.64  1858.43   +1.73%   -6.28%
                   >                                   
 .BELEX  Belgrade  <.BELEX   791.73   795.01   -0.41%   -1.24%
 15                15>                                 
 .SOFIX  Sofia     <.SOFIX   546.75   546.75   +0.00%   -3.76%
                   >                                   
                                                              
                            Yield    Yield    Spread   Daily
                            (bid)    change   vs Bund  change
                                                       in
         Czech                                         spread
         Republic                                      
 CZ2YT=    2-year  <CZ2YT=   1.8190   0.1610   +264bp   +15bps
 RR                RR>                              s  
 CZ5YT=    5-year  <CZ5YT=   1.4010  -0.0720   +219bp    -8bps
 RR                RR>                              s  
 CZ10YT            <CZ10YT   1.2730  -0.0200   +188bp    -3bps
 =RR     10-year   =RR>                             s  
         Poland                                               
 PL2YT=    2-year  <PL2YT=   1.3330   0.0600   +215bp    +5bps
 RR                RR>                              s  
 PL5YT=    5-year  <PL5YT=   1.5090   0.0950   +230bp    +9bps
 RR                RR>                              s  
 PL10YT            <PL10YT   1.7170   0.0640   +233bp    +5bps
 =RR     10-year   =RR>                             s  
                   FORWARD                                    
                            3x6      6x9      9x12     3M
                                                       interba
                                                       nk
         Czech     <CZKFRA     2.06     1.81     1.61     2.38
         Rep       ><PRIBO                             
                   R=>                                 
         Hungary   <HUFFRA     0.78     0.92     1.01     0.63
                   ><BUBOR                             
                   =>                                  
         Poland    <PLNFRA     1.50     1.32     1.22     1.71
                   ><WIBOR                             
                   =>                                  
         Note:     are for ask                                
         FRA       prices                              
         quotes                                        
   

 (Editing by Arun Koyyur)
  
 
 
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