October 4, 2019 / 10:03 AM / 18 days ago

CEE MARKETS-Polish stocks gain as court ruling on FX loans removes uncertainty

    By Marton Dunai and Alicja Ptak
    BUDAPEST/WARSAW, Oct 4 (Reuters) - Polish stocks led mild
regional gains on Friday after a court ruling seen less
unfavourable to the country's financial sector than expected
pulled prices higher, with some bank stocks jumping as much as 5
percent.
    The European Union's top court on Thursday ruled in favour
of Polish consumers who took out mortgages in Swiss Francs,
allowing them to ask courts to convert loans into the local
zloty currency in a blow for lenders.
    Changing the terms of the loans, which had become
prohibitively expensive after the Swiss franc jumped in value,
means Polish banks will have to refund some customers, but
removal of uncertainty about the outcome was greeted with relief
by investors.
    The WIG banks index was up 1.2 percent in early
Friday trading. Millennium was up nearly 5 percent,
while other affected bank stocks posted more moderate gains. The
overall stock market added 1.1 percent, outpacing gains
elsewhere in the region, which stayed below 1 percent.
    The ruling was also expected to have a mildly positive
effect on the zloty, although as the initial relief wears off
the lack of clarity in the medium-term may come back to haunt
Polish markets once again.
    "We believe that, after the ruling, the (Polish) currency
may gain a little bit in a short-term," Santander said in a note
to clients. "However, the reality is that uncertainty... has not
disappeared, which in the medium-term may exert a slightly
negative pressure on the PLN."
    External factors such as Brexit will creep back to steer the
exchange rate as well, the bank added.
    In Hungary, the Budapest Stock Exchange suspended trading in
the shares of Opus Global, a group controlled by
Prime Minister Viktor Orban's close ally Lorinc Meszaros, for
the day, prompting market speculation about impending news.
    Opus shares have added about 60% in the last two years -
while the overall market is up less than 6% - as the company has
grown into a wide-ranging conglomerate, with its first-half
revenues up fivefold since 2018. The stock has fallen far from
its all-time high set in 2018, however, as it is yet to undergo
restructuring and turn a profit.
    The forint, which has recovered from record lows
set last week, was stable in morning trading but investors do
not count on significant gains against the euro, CIB Bank said
in a note.
    "Forex markets are guided by a combination of unchanged
(dovish) monetary policy outlook and a hectic international
environment," CIB said.
    After Poland's September inflation came in below
expectations this week, Hungary and the Czech Republic also
publish their own figures next week, providing some guidance for
regional monetary moves.
    
            CEE        SNAPSHOT   AT                         
            MARKETS              1020 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2019
 Czech                  25.7130   25.7010    -0.05%    -0.02%
 crown                                               
 Hungary               332.3000  332.3700    +0.02%    -3.37%
 forint                                              
 Polish                  4.3265    4.3298    +0.08%    -0.85%
 zloty                                               
 Romanian                4.7490    4.7488    -0.00%    -2.00%
 leu                                                 
 Croatian                7.4200    7.4160    -0.05%    -0.13%
 kuna                                                
 Serbian               117.3100  117.4700    +0.14%    +0.84%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2019
 Prague                 1008.47  1005.480    +0.30%    +2.22%
                                        0            
 Budapest              39758.33  39547.59    +0.53%    +1.58%
 Warsaw                 2122.33   2099.30    +1.10%    -6.78%
 Bucharest              9446.11   9429.07    +0.18%   +27.93%
 Ljubljana               861.19    857.59    +0.42%    +7.08%
 Zagreb                 1925.13   1926.05    -0.05%   +10.08%
 Belgrade   <.BELEX15    743.52    744.19    -0.09%    -2.39%
            >                                        
 Sofia                   564.52    565.90    -0.24%    -5.04%
                       BONDS                                 
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.2750   -0.0980   +203bps    -10bps
            >                                        
   5-year   <CZ5YT=RR    1.0860   -0.0240   +191bps     -2bps
            >                                        
   10-year  <CZ10YT=R    1.3140   -0.0110   +191bps     +0bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    1.4900   -0.0080   +225bps     -1bps
            >                                        
   5-year   <PL5YT=RR    1.6600   -0.0260   +248bps     -2bps
            >                                        
   10-year  <PL10YT=R    1.8980   -0.0350   +249bps     -3bps
            R>                                       
            FORWARD    RATE      AGREEMEN                    
                                 T                   
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      2.21      2.13      1.99      2.16
            PRIBOR=>                                 
 Hungary            <      0.26      0.31      0.34      0.21
            BUBOR=>                                  
 Poland             <      1.73      1.70      1.67      1.72
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
 
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