March 6, 2020 / 11:27 AM / in a month

CEE MARKETS-FX, stocks drop as coronavirus quashes recent gains

    PRAGUE, March 6 (Reuters) - Central European stock indices fell
as much as 4% and currencies lost up to half a percent on Friday,
giving back most of their gains from the week as markets around the
world tumbled on the fast-spreading coronavirus epidemic.
    After the region got a boost earlier in the week from the U.S.
Federal Reserve's 50-basis-point rate cut, central European assets
dropped on Friday as the number of new coronavirus cases spread in
Europe and the United States, heightening fears of a global
recession.
    Serbia and Slovakia reported their first cases of the
coronavirus, while Czech Prime Minister Andrej Babis called on
Czechs to stay out of Italy - the epicentre of the European
outbreak.
    Italy this week announced the closure of all schools and
universities for two weeks, while California declared a state of
emergency to limit the spread of the virus, which has infected more
than 98,000 people globally and caused over 3,300 deaths. 
    "Risk-off again in the CEE region," a Prague trader said.
    The Polish zloty was down 0.2% at 4.307 to the euro,
staying off a nearly five-month low hit last week. 
    Hungary's forint also stayed clear of an all-time low
but was down 0.3% at 337.25. The Czech crown led losses,
falling 0.5% to 25.48.
    Stock markets took the brunt of the hit, with Budapest
shedding more than 4% and Warsaw blue-chips down more than
3%. Prague lost 2.25%. The declines were lower than what was
reported last week amid coronavirus fears.
    Hungary's OTP Bank, which had outperformed most
banking stocks in recent weeks, lost 6% despite posting a record
2019 profit on Friday. 
    "Loan growth in Hungary was very robust in the beginning of the
year but nobody sees past March," Concorde Securities sales trader
Norbert Harcsa said, referring to market worries.
    The Fed action this week, followed by other global central
banks, has raised questions of whether policy setters in the region
could follow suit even as rising inflation in the region has put
pressure on rates to rise.
    ING said on Friday it saw no imminent chance of the region
"joining the chorus" of easing and any moves would likely come
later, rather than sooner. A drop in Czech forward rates this week,
it said, made the Czech 3x6 FRA attractive for payers.
    Analysts have also said Hungary was now off the hook for policy
tightening despite  region-leading price growth.
    
                   CEE      SNAPSHOT     AT                        
                   MARKETS              1146                
                                        CET                 
                            CURRENCIES                             
                            Latest      Previou  Daily      Change
                                        s                   
                            bid         close    change     in 2020
 EURCZK  Czech     <EURCZK     25.4800  25.3640     -0.46%   -0.19%
 =       crown     =>                                       
 EURHUF  Hungary   <EURHUF    337.2500  336.195     -0.31%   -1.81%
 =       forint    =>                         0             
 EURPLN  Polish    <EURPLN      4.3070   4.2990     -0.19%   -1.17%
 =       zloty     =>                                       
 EURRON  Romanian  <EURRON      4.8110   4.8117     +0.01%   -0.47%
 =       leu       =>                                       
 EURHRK  Croatian  <EURHRK      7.4935   7.4930     -0.01%   -0.64%
 =       kuna      =>                                       
 EURRSD  Serbian   <EURRSD    117.4900  117.590     +0.09%   +0.07%
 =       dinar     =>                         0             
         Note:     calculated from               1800 CET          
         daily                                              
         change                                             
                                                                   
                            Latest      Previou  Daily      Change
                                        s                   
                                        close    change     in 2020
 .PX     Prague                 968.41  990.660     -2.25%  -13.20%
                                              0             
 .BUX    Budapest             40881.83  42607.9     -4.05%  -11.29%
                                              8             
 .WIG20  Warsaw    <.WIG20     1762.38  1822.85     -3.32%  -18.03%
                   >                                        
 .BETI   Buchares              9449.64  9594.01     -1.50%   -5.29%
         t                                                  
 .SBITO  Ljubljan  <.SBITO      876.35   904.42     -3.10%   -5.35%
 P       a         P>                                       
 .CRBEX  Zagreb    <.CRBEX     1825.63  1859.66     -1.83%   -9.51%
                   >                                        
 .BELEX  Belgrade  <.BELEX      776.59   788.23     -1.48%   -3.13%
 15                15>                                      
 .SOFIX  Sofia     <.SOFIX      533.37   536.40     -0.56%   -6.12%
                   >                                        
                                                                   
                            Yield       Yield    Spread     Daily
                            (bid)       change   vs Bund    change
                                                            in
         Czech                                              spread
         Republic                                           
 CZ2YT=    2-year  <CZ2YT=      1.6870   0.0090    +257bps    +4bps
 RR                RR>                                      
 CZ5YT=    5-year  <CZ5YT=      1.4110  -0.0600    +230bps    -3bps
 RR                RR>                                      
 CZ10YT            <CZ10YT      1.2300  -0.0410    +197bps    +2bps
 =RR     10-year   =RR>                                     
         Poland                                                    
 PL2YT=    2-year  <PL2YT=      1.2560  -0.0150    +214bps    +1bps
 RR                RR>                                      
 PL5YT=    5-year  <PL5YT=      1.3830  -0.0610    +227bps    -3bps
 RR                RR>                                      
 PL10YT            <PL10YT      1.6440  -0.0610    +238bps    +0bps
 =RR     10-year   =RR>                                     
                   FORWARD                                         
                            3x6         6x9      9x12       3M
                                                            interba
                                                            nk
         Czech     <CZKFRA        2.03     1.64       1.36     2.34
         Rep       ><PRIBO                                  
                   R=>                                      
         Hungary   <HUFFRA        0.76     0.76       0.78     0.66
                   ><BUBOR                                  
                   =>                                       
         Poland    <PLNFRA        1.51     1.26       1.14     1.70
                   ><WIBOR                                  
                   =>                                       
         Note: FRA quotes are for ask                              
         prices                                             
         
0 : 0
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