February 5, 2019 / 11:10 AM / 6 months ago

CEE MARKETS-Romanian stocks rise on hope for changes in bank tax

    * Romanian meeting fuels hopes for changes in bank tax
    * Bank stocks push Bucharest index to 4-week-high
    * Cbanks seen on hold in Bucharest, Prague, Warsaw, Belgrade
    * Romanian bond yield rises again after retreat

    By Sandor Peto
    BUDAPEST, Feb 5 (Reuters) - Romanian bank shares pushed
Bucharest stocks to a four-week-high on Tuesday on hopes
that a new tax may hurt lenders less than initially feared.
    The shares of Banca Transilvania and BRD Group
Societe Generale built on the previous session's
gains to set multi-week highs. A meeting of finance ministry and
central bank officials on Monday generated some hopes of changes
  to the new tax that would be less painful to banks.
    Bucharest's blue-chip index is still about 13 percent lower
than its level before the government announced in mid-December
new taxes on the banking and the energy sectors, effective from
2019, causing a plunge in share prices.
    The country has yet to finalise its 2019 budget and it is
still unclear how exactly the tax on bank assets, which the
government has said would be linked to interbank rates, will be
applied.
    The central bank is due to hold a meeting on Thursday, where
it is expected to keep its 2.5 percent main rate on hold, but
uncertainty over the tax is likely to continue as consultations
with the government are due to resume only on Feb. 18.
    The Czech and the Serbian central banks are also due to meet
on Thursday, and the Polish central bank will decide on interest
rates on Wednesday.
    All four banks are expected to keep rates on hold.
    Their currencies -- the leu, the crown,
the dinar and the zloty -- were a shade
stronger versus the euro on Tuesday at 1001 GMT.
    The forint eased 0.2 percent to 317.68.
    It has given up some ground in the past week as investors
were scaling back expectations that Hungary's central bank could
start to tighten policy soon, but it is near nine-month highs of
315.00 and well off a 2019 low of 324.25 set on Jan. 16.
    Hungarian and Czech retail sales growth data for December
showed some slowdown, but a robust rise in wages is still
expected to fuel rising consumption across the region.

    Stocks and government bonds in the region's main markets
changed little, except for Bucharest.
    The yield on Romania's 5-year government bonds rose 8 basis
points to 4.43 percent, after plunging almost 40 basis points
since Jan. 28 as the government said it could afford not to sell
bonds for months if yields remain too high.
    The tax plan has fuelled jitters in Romania's government
bond market because it refers to banks' financial assets,
including bonds held by them. 

    
            CEE       SNAPSHOT   AT                         
            MARKETS             1101 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.6850   25.6950    +0.04%    +0.09%
 crown      >                                       
 Hungary    <EURHUF=  317.6800  317.2500    -0.14%    +1.07%
 forint     >                                       
 Polish     <EURPLN=    4.2866    4.2880    +0.03%    +0.07%
 zloty      >                                       
 Romanian   <EURRON=    4.7447    4.7505    +0.12%    -1.91%
 leu        >                                       
 Croatian   <EURHRK=    7.4140    7.4155    +0.02%    -0.05%
 kuna       >                                       
 Serbian    <EURRSD=  118.3500  118.3900    +0.03%    -0.04%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1056.37  1052.050    +0.41%    +7.08%
                                       0            
 Budapest             40842.16  40856.97    -0.04%    +4.35%
 Warsaw                2389.87   2390.46    -0.02%    +4.97%
 Bucharest             7377.51   7294.19    +1.14%    -0.08%
 Ljubljana  <.SBITOP    828.00    831.57    -0.43%    +2.95%
            >                                       
 Zagreb                1760.29   1761.03    -0.04%    +0.66%
 Belgrade   <.BELEX1    700.17    700.38    -0.03%    -8.08%
            5>                                      
 Sofia                  578.80    578.40    +0.07%    -2.63%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.7850    0.0400   +236bps     +4bps
            R>                                      
   5-year   <CZ5YT=R    1.6040    0.0330   +193bps     +2bps
            R>                                      
   10-year  <CZ10YT=    1.7160    0.0090   +152bps     -1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5450   -0.0820   +212bps     -8bps
            R>                                      
   5-year   <PL5YT=R    2.2290    0.0110   +255bps     +0bps
            R>                                      
   10-year  <PL10YT=    2.7750    0.0000   +258bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.08      2.11      2.13      1.99
            <PRIBOR=                                
            >                                       
 Hungary                  0.33      0.51      0.69      0.15
                                                    
 Poland                   1.73      1.73      1.73      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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