November 5, 2018 / 10:45 AM / a year ago

CEE MARKETS-OTP boosts Budapest stock index, currencies retreat

    * Hopes for good earnings boosts OTP Bank, Budapest share
    * CEE markets in cautious mood after fall in Asian bourses
    * Hungary's Oct PMI shows pick-up, in contrast with Czechs,
    * Leu flat, Romanian central bank not seen under pressure to

    By Sandor Peto
    BUDAPEST, Nov 5 (Reuters) - Budapest's main stock index
 tested 5-month highs on Monday, driven by hopes for a
good earnings report from OTP, Central Europe's
biggest independent lender.
    Investors in the region's emerging markets were otherwise
cautious after a fall in Asian shares and the yuan due to
fears of a continuation of the U.S.-China trade war.
    Strong U.S. jobs data released on Friday also knocked back
the euro, reversing a firming of Central European
currencies on Friday.
    But the shares of OTP rose as much as 3 percent, helping the
bourse index approach its highest levels since early June.
    While Hungarian markets were closed from Thursday to Sunday,
the European Bank for Reconstruction and Development (EBRD)
increased its growth forecasts for Hungary, Equilor brokerage
analyst Balint Kovacs said.
    "Also, OTP is expected to report strong (third-quarter)
results on Friday," Kovacs said, adding that the share price,
after breaking through resistance at 10,400 forints ($36.74),
was halted by its 200-day moving average at 10.600 forints.
    Adding to the positive factors, Hungary's Purchasing
Managers' Index (PMI) data showed a sharp pick-up in economic
activity in October to 57.3 from 54.1 in September, in contrast
to a slowdown indicated by Czech and Polish data released last
    However, the forint retreated in early trade,
shedding 0.2 percent to hit 322.5 versus the euro at 0832 GMT, 
off Friday's 3-month highs of 321.
    "Local players were on holiday on Friday. The forint
retreated as they returned," one Budapest-based dealer said.
    The region's currencies had been helped late last week by a
strengthening of the euro, but Friday's robust U.S. jobs 
boosted expectations for further Federal Reserve rate hikes, and
weakened the single currency.
    The zloty was firmer by 0.15 percent versus the
euro on Monday, but off a one-week high set on Friday.
    Friday's Polish PMI figures showed economic activity was
close to stalling, underpinning expectations that the Polish
central bank could maintain its loose policy stance at its
meeting on Wednesday.
    The slowdown did not weigh on Polish assets as the figures
were not in line with alternative business surveys, analysts
    "We believe the slowdown in Poland will be less sharp than
the PMI implies," Santander bank analysts said in a note.
    The leu was steady ahead of a meeting of Romania's
central bank on Tuesday where it is expected to keep rates on
    "If the government sticks to its proposal of freezing wages
in the public sector... the central bank will get much more room
for manoeuvre and will wait for its next rate hike until the ECB
takes action or signals tightening," Erste analysts said in a
            CEE       SNAPSHOT   AT                         
            MARKETS             1032 CET            
                      Latest    Previous  Daily     Change
                      bid       close     change    in 2018
 Czech      <EURCZK=   25.8350   25.8250    -0.04%    -1.13%
 crown      >                                       
 Hungary    <EURHUF=  322.5000  321.9500    -0.17%    -3.59%
 forint     >                                       
 Polish     <EURPLN=    4.3140    4.3206    +0.15%    -3.19%
 zloty      >                                       
 Romanian   <EURRON=    4.6610    4.6616    +0.01%    +0.40%
 leu        >                                       
 Croatian   <EURHRK=    7.4380    7.4375    -0.01%    -0.10%
 kuna       >                                       
 Serbian    <EURRSD=  118.2800  118.3500    +0.06%    +0.19%
 dinar      >                                       
 Note:      calculated from               1800 CET          
                      Latest    Previous  Daily     Change
                                close     change    in 2018
 Prague                1070.38  1067.730    +0.25%    -0.72%
 Budapest             37435.16  37155.21    +0.75%    -4.93%
 Warsaw                2201.13   2197.68    +0.16%   -10.57%
 Bucharest             8570.75   8563.37    +0.09%   +10.54%
 Ljubljana  <.SBITOP    808.51    803.66    +0.60%    +0.26%
 Zagreb                1776.80   1769.80    +0.40%    -3.59%
 Belgrade   <.BELEX1    743.16    742.68    +0.06%    -2.19%
 Sofia                  596.21    596.80    -0.10%   -11.99%
                      Yield     Yield     Spread    Daily
                      (bid)     change    vs Bund   change
 Czech                                              spread
   2-year   <CZ2YT=R    1.5240   -0.1430   +217bps    -14bps
   5-year   <CZ5YT=R    1.8540    0.0140   +203bps     +2bps
   10-year  <CZ10YT=    2.1120    0.0000   +169bps     +1bps
   2-year   <PL2YT=R    1.5710    0.0050   +222bps     +1bps
   5-year   <PL5YT=R    2.4710    0.0040   +264bps     +1bps
   10-year  <PL10YT=    3.2380    0.0100   +281bps     +2bps
            FORWARD   RATE      AGREEMEN                    
                      3x6       6x9       9x12      3M
 Czech Rep                2.05      2.20      2.35      1.96
 Hungary                  0.35      0.61      0.98      0.16
 Poland                   1.77      1.80      1.87      1.72
 Note: FRA  are for ask prices                              
0 : 0
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