May 8, 2020 / 10:49 AM / 25 days ago

CEE MARKETS-Forint and stocks gain, Richter shares outperform on Q1 earnings

    By Anita Komuves
    BUDAPEST, May 8 (Reuters) - The Hungarian forint firmed,
outperforming its regional peers, while Central European stock
markets strengthened on Friday, helped by a global risk-on mood
on hopes that trade tensions between the United States and China
were easing.
    The forint gained 0.25% and was trading at 349.45
to the euro. The Polish zloty eased 0.04% to 4.552
versus the euro, while the Romanian leu was stable.   
    Regional currencies have suffered significant losses since
the lockdown measures aiming to stop the spread of the
coronavirus brought economic activity to a halt. 
   
    
 For an interactive graphic on CEE economic developments: reut.rs/3exsJHO
    
    The International Monetary Fund forecasts that economies in
the region will contract by 3-7% this year due to the pandemic.
    Helped by policy tightening by the previously ultra-dovish
Hungarian central bank, the forint has outperformed its peers
and regained a significant share of its losses since April 1
when it hit a record low near 370 to the euro. 
    The forint has lost 5.2% of its value to the euro this year
while the zloty and the Czech crown are more than 6% down each
in 2020. 
    "The forint has been outperforming its peers recently
because interest rates have been going up, and because several
foreign studies suggest that Hungary will come out better from
the coronavirus pandemic than other countries in the region," a
Budapest-based trader said. 
    Hungarian headline inflation was at an annual 2.4% in April
after a 3.9% annual reading in March, while core inflation
stayed near a seven-year high, at an annual 4.3%, data showed on
Friday.
    The Czech National Bank (CNB) cut its main interest rate by
a bigger-than-expected 75 basis points on Thursday, the third in
a series of big reductions, as it seeks to soften the economic
blow of the COVID-19 outbreak. 
    The move took the two-week repo rate to 0.25%.
Markets had largely expected a 50 basis point cut. The rate cut
sent the crown to the week's lowest levels on Thursday.

    "The CZK did not take the deeper cut well, which now makes
it the lowest-yielding currency in the region," Morgan Stanley
said in a morning note. 
    "Despite the weakness on the day, we remain more
constructive. The market was already pricing for the repo rate
to go to 0%, so one can argue that there will be less pressure
on the currency in the future on that front. Risk premia remains
one of the highest across all EM currencies."
    Equities in Warsaw and Bucharest were up
more than 1.4% by 1039 GMT. Markets in Prague were closed for a
holiday.
    Budapest's blue chip index firmed 0.82%. Hungarian
pharma company Richter reported a net profit of 29
billion forints in the first quarter, above forecasts, and its
shares were up 1.9% at 1046 GMT, outperforming the wider market.
    OTP Bank posted a net loss of 4 billion forints in
the first quarter as risk costs soared to record high due to the
coronavirus pandemic. Its shares were up 0.1%.

    
            CEE        SNAPSHOT    AT                         
            MARKETS               1239 CET            
                       CURRENCIE                              
                       S                              
                       Latest     Previous  Daily     Change
                       bid        close     change    in 2020
 Czech                   27.3050   27.2200    -0.31%    -6.86%
 crown                                                
 Hungary                349.4500  350.3400    +0.25%    -5.24%
 forint                                               
 Polish                   4.5520    4.5500    -0.04%    -6.49%
 zloty                                                
 Romanian                 4.8285    4.8297    +0.02%    -0.83%
 leu                                                  
 Croatian                 7.5620    7.5660    +0.05%    -1.54%
 kuna                                                 
 Serbian                117.5300  117.6100    +0.07%    +0.03%
 dinar                                                
 Note:      calculated from                 1800 CET          
 daily                                                
 change                                               
                                                              
                       Latest     Previous  Daily     Change
                                  close     change    in 2020
                                                              
 Budapest               34897.02  34613.57    +0.82%   -24.27%
 Warsaw                  1610.07   1587.35    +1.43%   -25.12%
 Bucharest               8310.70   8192.20    +1.45%   -16.70%
 Ljubljana                797.60    797.54    +0.01%   -13.85%
 Zagreb                  1538.10   1528.11    +0.65%   -23.76%
 Belgrade   <.BELEX15     661.60    662.02    -0.06%   -17.47%
            >                                         
 Sofia                    446.63    446.95    -0.07%   -21.39%
                                                              
                       Yield      Yield     Spread    Daily
                       (bid)      change    vs Bund   change
                                                      in
 Czech                                                spread
 Republic                                             
   2-year   <CZ2YT=RR     0.3290   -0.0210   +111bps     -1bps
            >                                         
   5-year   <CZ5YT=RR     0.5950   -0.0110   +135bps     +0bps
            >                                         
   10-year  <CZ10YT=R     1.1190    0.0060   +167bps     +1bps
            R>                                        
 Poland                                                       
   2-year   <PL2YT=RR     0.5610   -0.0030   +134bps     +1bps
            >                                         
   5-year   <PL5YT=RR     1.0780    0.0100   +184bps     +2bps
            >                                         
   10-year  <PL10YT=R     1.5480    0.0030   +210bps     +1bps
            R>                                        
            FORWARD                                           
                       3x6        6x9       9x12      3M
                                                      interban
                                                      k
 Czech Rep          <       0.30      0.30      0.30      0.87
            PRIBOR=>                                  
 Hungary            <       1.14      1.11      1.07      1.08
            BUBOR=>                                   
 Poland             <       0.28      0.31      0.34      0.68
            WIBOR=>                                   
 Note: FRA  are for ask prices                                
 quotes                                               
 
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