May 6, 2019 / 10:54 AM / 2 months ago

CEE MARKETS-Prague leads stocks fall as government may tap bank dividends

    * Czech PM says banks should pay part of dividends into a
fund
    * Czech bank stocks fall again, pushing index lower
    * Global risk aversion weighs on CEE currencies, stocks

    By Sandor Peto
    BUDAPEST, May 6 (Reuters) - Prague led a decline in Central
European equities on Monday after Czech Prime Minister Andrej
Babis said banks should pay part of their dividends into a new
state development fund. 
    Last week also started with a plunge of Czech bank stocks
due to government discussions of ways how to make up for the
revenue loss in the budget from a slowdown in economic growth.
    Prague's main index almost fully recovered last week
from a fall to this year's lowest levels after Babis clarified
that he did not support a new tax on bank assets proposed by the
junior ruling party, the Social Democrats.
    But Babis said on Sunday Czech banks should pay up to 20
percent of their dividends into a new state development fund.
 
    The main index fell 1.1 percent, driven lower by a decline
in the stocks of Erste, Komercni Banka and
Moneta Money Bank.
    Austrian-based Erste reported a 12 percent increase in net
profits in the first quarter on Friday thanks to solid lending
in its core markets including the Czech Republic and Austria.

    Equities eased across Central Europe as risk appetite got
hit in global market by a renewal of trade tensions between the
United States and China.
    Warsaw's bluechip index fell by 1.1 percent to a
4-month low.
    Regional currencies also mostly eased, with the most liquid
zloty and the forint shedding 0.2 percent
against the euro, trading at 4.2843 and 323.65, respectively.
    The forint was still off the 5-month lows it set last week
amid concerns that inflation may rise to around the top of the
Hungarian central bank's (NBH) 2-4 percent target, raising
questions about the credibility of the bank's policy.
    The NBH increased its overnight deposit rate and announced
some liquidity tightening in forint markets in March, but also
dropped its guidance for gradual monetary tightening.
    Hungarian retail sales figures released on Monday showed a
slowdown in annual growth to 5.9 percent in March from 8.4
percent in February.
    But the slowdown is caused by base effects, analysts said.
    "Given strong consumption figures published for the first
quarter, as well as surprising resilience of industrial
performance to global economic slowdown, the 1Q19 GDP figures
might have been fairly strong, and might approach again 5% y/y
in the January-March period," Erste analyst Orsolya Nyeste wrote
in a note.
    
            CEE       SNAPSHOT   AT                         
            MARKETS             1108 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.7080   25.7200    +0.05%    -0.00%
 crown      >                                       
 Hungary    <EURHUF=  323.6500  323.0700    -0.18%    -0.79%
 forint     >                                       
 Polish     <EURPLN=    4.2843    4.2771    -0.17%    +0.12%
 zloty      >                                       
 Romanian   <EURRON=    4.7545    4.7515    -0.06%    -2.11%
 leu        >                                       
 Croatian   <EURHRK=    7.4120    7.4155    +0.05%    -0.03%
 kuna       >                                       
 Serbian    <EURRSD=  117.8200  118.0000    +0.15%    +0.41%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1067.66  1079.630    -1.11%    +8.22%
                                       0            
 Budapest             41456.63  41775.36    -0.76%    +5.92%
 Warsaw                2293.04   2319.08    -1.12%    +0.72%
 Bucharest             8414.11   8443.43    -0.35%   +13.96%
 Ljubljana  <.SBITOP    884.04    886.26    -0.25%    +9.92%
            >                                       
 Zagreb                1835.99   1843.50    -0.41%    +4.99%
 Belgrade   <.BELEX1    743.36    743.15    +0.03%    -2.41%
            5>                                      
 Sofia                  571.30    571.30    +0.00%    -3.90%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.6180    0.0210   +222bps     +2bps
            R>                                      
   5-year   <CZ5YT=R    1.7630    0.0160   +219bps     +2bps
            R>                                      
   10-year  <CZ10YT=    1.8810   -0.0030   +187bps     +1bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6960   -0.0090   +230bps     -1bps
            R>                                      
   5-year   <PL5YT=R    2.3560   -0.0180   +278bps     -1bps
            R>                                      
   10-year  <PL10YT=    3.0260   -0.0170   +302bps     -1bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.24      2.26      2.26      2.20
            <PRIBOR=                                
            >                                       
 Hungary                  0.34      0.52      0.70      0.16
                                                    
 Poland                   1.75      1.77      1.80      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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