May 10, 2019 / 10:23 AM / 4 months ago

CEE MARKETS-Forint leads gains on German data, global relief

    * Renewed hope for U.S.-China trade deal buoys CEE FX,
stocks
    * German export data also helps price rises
    * Hungarian government bonds extend post-CPI data price
gains
    * Warsaw stocks lead rise, rebound from 6-month low
    * Q1 results boost OTP Bank, knock down Richter shares

    By Sandor Peto
    BUDAPEST, May 10 (Reuters) - Central European stocks and
currencies firmed on Friday, helped by strong German export data
and hopes in global markets for a trade deal between the United
States and China.
    A U.S. tariff increase on Chinese goods took force on
Friday, but the White House has said the two sides would resume
trade talks on Friday, restoring optimism in markets.
    The MSCI emerging market equities index was up 0.8
percent by 0905 GMT, while the dollar-based currency index
firmed 0.3 percent.
    In Central Europe, the forint led gains,
strengthening by 0.2 percent against the euro to 323.45.
    The zloty, the leu and the Czech crown
 firmed by 0.1 percent.
    The forint and Hungarian government bonds have firmed since 
Thursday when the central bank (NBH) said its main core
inflation gauge dropped to 3.4 percent year-on-year in April
from 3.4 percent in March.
    That reduced worries that the bank, which dropped its
guidance for gradual monetary tightening, won't get much behind
the tightening curve as headline inflation rose to 3.9 percent,
only a tad below the top of the NBH's 2-4 percent target range.
    Hungary' 10-year government bonds traded at a yield of 3.28
percent, down a further 3 basis points from Thursday's fixing
even though the 10-year German Bund yield, closely
watched in the region, rebounded from 5-week lows.
    The Czech crown firmed even though the minutes of the Czech
central bank's May 2 meeting revealed that a majority of board
members agreed that the next interest rate move could go in
either direction.
    A cut would end two years of rate increases by the bank.
    Surging wages in Central Europe propel inflation, but both
the NBH and the CNB have seen weak growth and price and interest
rate dynamics in the euro zone as a brake on inflation.
    Export data released on Friday by Germany, a key trade
partner of the region, showed an unexpected rise, supporting the
euro whose strengthening against the greenback often
helps Central European currencies as well.
    Polish stocks led a rebound of equities.
    Warsaw's bluechip index rose 1.2 percent, off
Thursday's 6-month lows, mainly driven by PKO BP bank
and insurer PZU, companies which are expected to
announce rising first-quarter earnings next week.

    Budapest's main index ,BUX> gained only 0.2 percent.
    It was helped by a 2.25 percent rise in the shares of OTP
, the region's biggest independent lender which
reported higher-than-expected earnings on Friday.

    But the index rise was dampened by a 5 percent fall in drug
producer Richter shares.
    Its first-quarter earnings were boosted by one-off items,
but costs caused by the EU's drug serialisation requirements
kept the rest of its operations weak, Erste analysts said in a
note, adding though that the share price drop was overdone.

    
            CEE       SNAPSHOT   AT                         
            MARKETS             1105 CET            
                      CURRENCI                              
                      ES                            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2019
 Czech      <EURCZK=   25.7270   25.7450    +0.07%    -0.08%
 crown      >                                       
 Hungary    <EURHUF=  323.4500  324.3200    +0.27%    -0.73%
 forint     >                                       
 Polish     <EURPLN=    4.2971    4.2995    +0.06%    -0.17%
 zloty      >                                       
 Romanian   <EURRON=    4.7575    4.7604    +0.06%    -2.18%
 leu        >                                       
 Croatian   <EURHRK=    7.4060    7.4068    +0.01%    +0.05%
 kuna       >                                       
 Serbian    <EURRSD=  117.8300  117.9300    +0.08%    +0.40%
 dinar      >                                       
 Note:      calculated from               1800 CET          
 daily                                              
 change                                             
                                                            
                      Latest    Previous  Daily     Change
                                close     change    in 2019
 Prague                1054.96  1051.400    +0.34%    +6.93%
                                       0            
 Budapest             41273.08  41207.46    +0.16%    +5.45%
 Warsaw                2203.83   2179.40    +1.12%    -3.20%
 Bucharest             8312.92   8298.17    +0.18%   +12.59%
 Ljubljana  <.SBITOP    867.12    865.12    +0.23%    +7.82%
            >                                       
 Zagreb                1842.28   1842.68    -0.02%    +5.34%
 Belgrade   <.BELEX1    734.97    733.61    +0.19%    -3.51%
            5>                                      
 Sofia                  565.98    568.88    -0.51%    -4.79%
                      BONDS                                 
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
                                                    in
 Czech                                              spread
 Republic                                           
   2-year   <CZ2YT=R    1.6340    0.0180   +226bps     +2bps
            R>                                      
   5-year   <CZ5YT=R    1.7380    0.0200   +220bps     +1bps
            R>                                      
   10-year  <CZ10YT=    1.8720   -0.0130   +191bps     -3bps
            RR>                                     
 Poland                                                     
   2-year   <PL2YT=R    1.6590   -0.0090   +228bps     -1bps
            R>                                      
   5-year   <PL5YT=R    2.2840   -0.0010   +275bps     -1bps
            R>                                      
   10-year  <PL10YT=    2.9230   -0.0110   +296bps     -2bps
            RR>                                     
            FORWARD   RATE      AGREEMEN                    
                                T                   
                      3x6       6x9       9x12      3M
                                                    interban
                                                    k
 Czech Rep                2.26      2.27      2.27      2.21
            <PRIBOR=                                
            >                                       
 Hungary                  0.38      0.54      0.72      0.16
                                                    
 Poland                   1.75      1.76      1.79      1.72
                                                    
 Note: FRA  are for ask prices                              
 quotes                                             
 
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