May 5, 2020 / 1:40 PM / a month ago

UPDATE 1-CEE MARKETS-Hungary launches bond purchases; FX, stocks up on risk appetite

 (Updates with Hungarian bond purchase results, market prices)
    By Anita Komuves and Jason Hovet
    BUDAPEST/PRAGUE, May 5 (Reuters) - Central European
currencies climbed on Tuesday after risk appetite strengthened
on some global easing of lockdown measures, while Hungary's
central bank kicked off its bond-buying scheme in a bid to
flatten the yield curve.
    Stock markets rose as much as 1.6%, with Prague
leading gains as several countries including Spain, Italy, India
and Malaysia tentatively eased lockdowns and governments in
central Europe continued to roll back such measures.
    The Prague market was boosted by a more than 5% jump in
tobacco group Philip Morris CR after the Czech-based
company proposed paying a dividend from last year's profit that
amounted to an 11% yield against Monday's closing price. 
    Also helping were gains in shares of MONETA Money Bank
, up 2.75%, after the Czech lender reported
first-quarter earnings and said it would return to dividend
payments as quickly as possible.
    The Hungarian central bank held the first tender of its new
asset-buying programme on Tuesday, buying 50 billion forints
($154.15 million) worth of government bonds.
    The bank has said it could buy up to 100 billion forints
worth of bonds per week, as it launched the purchases to drive
longer-dated government debt yields down.
    Long-term yields have dropped since the central bank
announced its plans last Tuesday. Yields edged up on
shorter-date bonds after the first auction.
    "The results suggest that the flattening on the long end of
the curve might continue," a Budapest trader said. "We need a
few weeks for the market to adjust and settle."
    Another trader said the central bank could be in secondary
markets in the coming days, adding the lower amount sold meant
some players missed out and that added some "sell-side
pressure".
    The Hungarian forint firmed 1.1% to 350.10 to the
euro and the Polish zloty was up over half a percent.
    The Czech crown gained 0.3% to test the
psychological 27 per euro level ahead of a central bank meeting
this week, where analysts expect the bank to cut rates for a
third time since the novel coronavirus outbreak started in
March.
    The central bank, which cut rates by a total of 125 basis
points in March, is now expected to cut rates by 50 basis points
at the policy meeting on Thursday.
    The outbreak and lockdown measures by countries to fight the
spread have hammered central Europe economies, with analysts
expecting an economic plunge in 2020 after several years of
solid growth.
    Manufacturing surveys (PMI) across central Europe on Monday
showed a grim picture, although some analysts see a bottom being
reached as economies return to life with governments around the
region starting to ease restrictions.
    "We believe ... April PMI will prove to be the very bottom
as restrictions are slowly, but surely being lifted, and we
should therefore see some improvement in May already,"
Raiffeisen said commenting on the Czech data.
    
    ** For an interactive graphic on expected GDP developments
in Central Europe: reut.rs/3exsJHO?eikon=true    
    
                                CEE MARKETS        SNAPSHOT  AT                        
                                                               1456 CET                
                                                                                       
                                CURRENCIES                                             
                                                   Latest    Previous        Daily     Change
                                                   bid       close           change    in 2020
 EURCZK=    Czech crown                            27.0250   27.1000         +0.28%    -5.89%
 EURHUF=    Hungary forint                         350.1000  354.0600        +1.13%    -5.41%
 EURPLN=    Polish zloty                           4.5350    4.5612          +0.58%    -6.14%
 EURRON=    Romanian leu                           4.8235    4.8301          +0.14%    -0.73%
 EURHRK=    Croatian kuna                          7.5720    7.5795          +0.10%    -1.67%
 EURRSD=    Serbian dinar                          117.5400  117.5800        +0.03%    +0.03%
            Note: daily change  calculated from                              1800 CET  
                                                                                       
                                STOCKS                                                 
                                                   Latest    Previous        Daily     Change
                                                             close           change    in 2020
 .PX        Prague                                 876.43    862.9500        +1.56%    -21.44%
 .BUX       Budapest                               34896.10  34576.84        +0.92%    -24.28%
 .WIG20     Warsaw                                 1600.81   1600.65         +0.01%    -25.55%
 .BETI      Bucharest                              8079.79   7992.41         +1.09%    -19.02%
 .SBITOP    Ljubljana                              796.68    793.12          +0.45%    -13.95%
 .CRBEX     Zagreb                                 1529.91   1525.46         +0.29%    -24.17%
 .BELEX15   Belgrade                               662.85    665.81          -0.44%    -17.32%
 .SOFIX     Sofia                                  447.96    447.74          +0.05%    -21.15%
                                                                                       
                                BONDS                                                  
                                                   Yield     Yield           Spread    Daily
                                                   (bid)     change          vs Bund   change in
            Czech Republic                                                             spread
 CZ2YT=RR   2-year                                 0.5980    0.0560          +138bps   +9bps
 CZ5YT=RR   5-year                                 0.8590    -0.0120         +163bps   +1bps
 CZ10YT=RR  10-year                                1.3320    0.0760          +190bps   +9bps
            Poland                                                                     
 PL2YT=RR   2-year                                 0.5280    0.0280          +131bps   +6bps
 PL5YT=RR   5-year                                 1.0360    -0.0030         +180bps   +2bps
 PL10YT=RR  10-year                                1.5330    -0.0020         +211bps   +1bps
                                                                                       
                                FRA                                                    
                                                   3x6       6x9             9x12      3M interbank
            Czech Rep                              0.30      0.29            0.33      0.90
            Hungary                                1.18      1.12            1.09      1.09
            Poland                                 0.26      0.28            0.30      0.68
            Note: FRA quotes are for ask prices                                        
            
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