CEE MARKETS 2-FHB shares jump on savings bank speculation

Mon Dec 30, 2013 9:39am EST

* FHB gained 50 pct in 2 weeks, seen buying into Takarekbank
    * Serb central bank continues to sell dinar to weaken it

    By Sandor Peto
    BUDAPEST, Dec 30 (Reuters) - Hungary's FHB Bank 
surged 15 percent on Monday, extending recent gains on
speculation it will bid for the government's stake in savings
banks whose market share is expected to increase.
    Its gains helped lift the Budapest stock index 1.2
percent, with Central European equity and currency markets 
otherwise mixed in slow trade ahead of the year-end.
    Budapest said two weeks ago that it would sell its majority
stake in Takarekbank, the umbrella group for Hungary's savings
banks, which are seeking to at least double their corporate
lending as part of a government drive to boost growth.
    FHB has not said whether it will bid, but its share price
has risen by about 50 percent since the announcement. 
    "Today's rise in FHB's price is probably again due to the
same speculation," said Akos Kuti, analyst at brokerage Equilor
in Budapest. "The question is whether it will be good or not:
the price can plunge from here if there is disappointment."
    Although the Dec. 18 decree described an open, international
tender, Prime Minister Viktor Orban has often said that half the
banking sector should be in Hungarian ownership and
foreign-owned banks have been cutting exposure to the country. 
    Central bank chief Gyorgy Matolcsy, an Orban ally, said this
month that four big banks could quit Hungary in the next 18
months, with local lenders or Asian investors replacing them.
 
    Banks in Hungary are among the most heavily taxed in Europe
and foreign lenders have been hit with losses on Swiss franc and
euro loans made to households that have struggled to service
them as the forint has fallen since the 2008 global crisis. 
    Government schemes to help foreign currency loan holders
have also dragged on shares in Hungary's biggest lender, OTP
Bank. They firmed 1.5 percent to 4,120 forints on
Monday, but were still near July's 2013 low of 3,950 forints. 
    The aid scheme is likely to remain a hot topic until
elections in April or May, and could also hit the forint
. It was bid at 296.43 to the euro at 1407 GMT, 0.1
percent weaker from Friday, while Poland's zloty was flat.
    Both currencies have shed about 2 percent against the euro
this year, after robust gains in 2012.

    ONLY SERBIA INTERVENES
    In the region only Serbia's central bank intervened in the
market on Monday, buying euros to weaken the dinar which it
holds in tightly managed ranges to keep investor confidence
ahead of loan talks due to start with the IMF in February.
    The bank has been buying euros in the past two weeks to
offset supply from companies which needed to sell euros to pay
their taxes in dinars.  
    The dinar was steady at 114.51 to the euro.     
    Polish state bank BGK sold a higher than usual amount of
euros in the market this month as the flow of revenues from the
European Union picked up. 
    The Polish Finance Ministry said there was no need for
zloty-strengthening market intervention as the country's debt
was below the legal threshold of 55 percent of GDP. A stronger
zloty cuts that ratio as part of debt is in foreign currencies.
    A stronger forint would also make Hungary's year-end debt
level lower, but market participants said forint turnover
remained low and there was no sign that the central bank would
try to strengthen the currency.  
    "Our calculations show that at forint levels at 300 the debt
level would already decline," said Raiffeisen analyst Adam
Keszeg.
    Hungary's centre-right government has pledged to cut its
debt, which is near 80 percent of output - the highest in the
region. The central bank said this month that at the forint's
end-2012 exchange rate of around 290, the debt would fall
slightly to 78.7 percent of GDP by the end of 2013.     
    While Hungary is trying to at least partially reverse its
1990s privatisations, neighbouring Slovenia plans to sell part
of its big state sector to help avert an international bailout.
    Slovenian white goods maker Gorenje raised much less than
planned in its secondary listing in Warsaw this month, however,
and the shares fell 9 percent at their debut on
Monday. Warsaw's main equity index was flat.

                  CEE MARKETS SNAPSHOT AT 1507 CET
 ************************** CURRENCIES ************************
                             Latest  Previous   Daily   Change
                             bid     close      change  in 2013
 Czech crown                 27.415    27.427  +0.04%  -8.63%
 Hungarian forint           296.460   296.050   -0.14%  -1.86%
 Polish zloty                 4.149     4.147    -0.03%  -1.80%
 Romanian leu                 4.472     4.456   -0.35%   -0.64%
 Croatian kuna                7.624     7.633   +0.11%  -0.96%
 Serbian dinar              114.510   114.500    -0.01%   -1.93%
 Note: daily change calculated from previous close at 1700 GMT
 **************************** STOCKS **************************
                             Latest  Previous   Daily   Change
                                     close      change  in 2013
 Prague                      988.57    986.91  +0.17%  -4.83%
 Budapest                  18558.59  18334.09   +1.22%  +2.12%
 Warsaw                     2400.79   2404.35    -0.15%  -7.05%
 Bucharest                  6486.64   6477.94  +0.13%  +25.96%
 ***************************** BONDS **************************
                         Yield    Yield    Spread    Daily
                         (bid)    change   vs Bund   change in
 Czech Republic                                      spread
   2-year                0.264   +0.087   +4bps    +10bps
   5-year                1.119    +0.083   +18bps     +10bps
  10-year                2.534    -0.004   +59bps     0bps
 Hungary
   3-year                4.030    +0.040   +364bps   +7bps
   5-year                4.650    +0.040   +371bps   +6bps
  10-year                5.630   +0.020    +368bps   +2bps
 ******************* FORWARD RATE AGREEMENTS ******************
                              3x6     6x9    9x12  3M interbank
 Czech Rep                    0.400   0.360  0.380   0.38
 Hungary                      2.870   2.930  3.060   2.99
 Poland                       2.730   2.730  2.775   2.71
 Note: FRA quotes are for ask prices
 **************************************************************
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