February 8, 2019 / 11:45 AM / 15 days ago

CEE MARKETS-Stocks, currencies ease on growth worries

    * Budapest stocks hit 5-week low, Prague off 2-month high
    * Bucharest stock recovery loses steam, tax row eyed
    * Czech central bank continues to project crown
strengthening

    By Sandor Peto
    BUDAPEST, Feb 8 (Reuters) - Central European stocks and
currencies extended their losses on Friday due to worries over
global economic growth and purchases of the U.S. dollar.
    Budapest led equities losses, with its bluechip index
falling 0.7 percent by 1005 GMT to 39,900 points.
    It was pushed below a technical support line at 40,500
points on Thursday by a report on a surprise fourth-quarter loss
from drug maker Richter and a cut in the European
Commission's forecasts for economic growth in the euro zone.
    "(And) there is the (U.S.-China) trade war and other risks
which keep sentiment negative for days or even weeks," said
Zoltan Varga, analyst of Equilor brokerage in Budapest.
    Bucharest's bluechip index joined the decline, but
later it regained most of the ground. 
    Romanian shares have gained almost 10 percent in the past
week amid hopes that the government may amend new taxes levied
on banks and energy companies.
    Prime Minister Viorica Dancila told the Antena3 television 
that the government may modify the decree on the controversial
taxes, but she did not elaborate.
    Finance Ministry and Romanian central bank officials are
expected to meet on Feb. 18 to further discuss the tax on bank
assets which is linked to interbank interest rates.
    Romania's budget and current account deficits, slowing
economy and a heat-up in politics in an election year could
weaken the leu further from its current ranges between
4.72-4.77 versus the euro, ING analysts said in a note.
    It eased 0.1 percent on Friday, in line with other units in
the region, to 4.7451.
    Weak demand at its latest auctions could nudge the
government towards exempting government bond holdings from the
bank tax base and bonds are already pricing in that prospect,
ING said.
    Romanian bonds yields were bid lower by about 10 basis
points on Friday in maturities up to 5 years, with the 5-year
paper bid at 4.38 percent, a one-month low. 
    Elsewhere, the Czech crown traded slightly weaker
at 25.805 versus the euro.
    The Czech central bank, which kept rates on hold on
Thursday, projected a strengthening in the crown to an average
rate of 24.8 by the third quarter, a stronger level than 25.315
projected by analysts for the end of July in a Reuters poll.

    "With respect to external reasons behind the weak CZK, the
CNB is no longer sure whether a rate raise could make the koruna
(crown) strengthen at all at the moment," KBC analysts said in a
note.
     
            CEE       SNAPSHOT   AT                         
            MARKETS             1105 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.8050   25.7940    -0.04%    -0.38%
 crown      >                                       
 Hungary    <EURHUF=  319.2800  319.0500    -0.07%    +0.57%
 forint     >                                       
 Polish     <EURPLN=    4.3089    4.3085    -0.01%    -0.45%
 zloty      >                                       
 Romanian   <EURRON=    4.7451    4.7424    -0.06%    -1.92%
 leu        >                                       
 Croatian   <EURHRK=    7.4080    7.4075    -0.01%    +0.03%
 kuna       >                                       
 Serbian    <EURRSD=  118.2600  118.3950    +0.11%    +0.03%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1054.24  1060.920    -0.63%    +6.86%
                                       0            
 Budapest             39900.45  40173.73    -0.68%    +1.95%
 Warsaw                2358.59   2371.33    -0.54%    +3.60%
 Bucharest             7523.18   7533.85    -0.14%    +1.89%
 Ljubljana  <.SBITOP    832.73    832.73    +0.00%    +3.54%
            >                                       
 Zagreb                1751.42   1767.69    -0.92%    +0.15%
 Belgrade   <.BELEX1    702.81    707.01    -0.59%    -7.73%
            5>                                      
 Sofia                  573.56    570.97    +0.45%    -3.52%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.7120   -0.0470   +228bps     -6bps
            R>                                      
   5-year   <CZ5YT=R    1.5960    0.0070   +199bps     +1bps
            R>                                      
   10-year  <CZ10YT=    1.7090    0.0050   +160bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.5510   -0.0970   +212bps    -11bps
            R>                                      
   5-year   <PL5YT=R    2.1820   -0.0070   +257bps     +0bps
            R>                                      
   10-year  <PL10YT=    2.7550    0.0150   +265bps     +2bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.08      2.11      2.13      2.00
            <PRIBOR=                                
            >                                       
 Hungary                  0.32      0.52      0.67      0.15
                                                    
 Poland                   1.74      1.72      1.73      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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