May 29, 2019 / 9:31 AM / 4 months ago

CEE MARKETS-Assets mostly weaker due trade tensions, forint slips on dovish c.bank

    BUDAPEST, May 29 (Reuters) - Emerging European assets were
mostly weaker in early trade on Wednesday due to concerns about
trade tensions between the United States and China, with the
Hungarian forint slipping after the central bank maintained a
dovish stance.
    Tuesday's decision by the National Bank of Hungary (NBH) to
keep all interest rates on hold was in line with expectations,
but some investors were looking for hawkish signs in its
post-meeting statement which did not materialize.
    The forint briefly eased to a new nine-month low
of 327.60 to the euro in early trade. By 0923 GMT it regained
some ground to trade at 327.05, flat from late Tuesday, but
still hovering near its 9-month lows.
    "The NBH did not change any monetary policy parameter or
guidance yesterday -- rather, it gave a relaxed view of
inflation while reiterating that inflation control remains its
sole objective," Commerzbank analysts said in a briefing note.
    "I expect a further weakening of the forint, as at this
moment there is nothing really to support it," a currency dealer
in Budapest said, adding that the forint could edge towards
record lows near 330 to the euro in the coming period.
    Central Europe's most dovish central bank raised its
overnight deposit rate by 10 basis points in March, halting
nearly seven years of monetary easing in Hungary, after
inflation rose near the top of its 2% to 4% target range.
    But the monetary authority said the hike was a one-off as an
economic slowdown in the euro zone would eventually could curb
inflation, and it has since kept rates on hold.
    Market players will be watching its June 25 meeting for
potential policy moves, as the bank will discuss its fresh
inflation forecasts then.
    "All in all, we continue to see a delayed normalisation
process with little desire from the NBH to tighten proactively
despite clear and widespread inflation pressures," Morgan
Stanley analysts said in a note to clients on Tuesday.
    Stock markets in Warsaw and Bucharest also traded weaker on
Wednesday, with global trade war fears prevailing and weighing
on sentiment. Budapest and Prague were in positive territory.
    Shares in Czech utility CEZ were up by about 1.4%.
    Company executives said on an analysts' call on Tuesday that
proceeds from planned divestments of foreign assets -- part of a
strategy to switch focus to the domestic market -- could go to
an extraordinary dividend, along with cutting leverage and new
investments in the Czech Republic.
            CEE        SNAPSHOT   AT                         
            MARKETS              1011 CET            
                       CURRENCI                              
                       ES                            
                       Latest    Previous  Daily     Change
                       bid       close     change    in 2019
 Czech                  25.8560   25.8470    -0.03%    -0.58%
 crown                                               
 Hungary               327.5000  327.0500    -0.14%    -1.96%
 forint                                              
 Polish                  4.3015    4.2952    -0.15%    -0.28%
 zloty                                               
 Romanian                4.7625    4.7615    -0.02%    -2.28%
 leu                                                 
 Croatian                7.4250    7.4243    -0.01%    -0.20%
 kuna                                                
 Serbian               117.8400  117.9700    +0.11%    +0.39%
 dinar                                               
 Note:      calculated from                1800 CET          
 daily                                               
 change                                              
                                                             
                       Latest    Previous  Daily     Change
                                 close     change    in 2019
 Prague                 1038.78  1038.160    +0.06%    +5.29%
                                        0            
 Budapest              40388.07  40466.85    -0.19%    +3.19%
 Warsaw                 2170.15   2192.87    -1.04%    -4.68%
 Bucharest              8431.03   8500.84    -0.82%   +14.18%
 Ljubljana               876.56    878.40    -0.21%    +8.99%
 Zagreb                 1868.87   1869.39    -0.03%    +6.87%
 Belgrade   <.BELEX15    730.90    732.54    -0.22%    -4.04%
            >                                        
 Sofia                   570.51    571.80    -0.23%    -4.03%
                       BONDS                                 
                       Yield     Yield     Spread    Daily
                       (bid)     change    vs Bund   change
                                                     in
 Czech                                               spread
 Republic                                            
   2-year   <CZ2YT=RR    1.7420   -0.0430   +239bps     -4bps
            >                                        
   5-year   <CZ5YT=RR    1.7170    0.0620   +227bps     +7bps
            >                                        
   10-year  <CZ10YT=R    1.7880   -0.0130   +195bps     +0bps
            R>                                       
 Poland                                                      
   2-year   <PL2YT=RR    1.6530   -0.0030   +230bps     +0bps
            >                                        
   5-year   <PL5YT=RR    2.1470   -0.0160   +270bps     -1bps
            >                                        
   10-year  <PL10YT=R    2.7380   -0.0500   +290bps     -4bps
            R>                                       
            FORWARD    RATE      AGREEMEN                    
                                 T                   
                       3x6       6x9       9x12      3M
                                                     interban
                                                     k
 Czech Rep          <      2.19      2.15      2.10      2.19
            PRIBOR=>                                 
 Hungary            <      0.35      0.53      0.70      0.20
            BUBOR=>                                  
 Poland             <      1.74      1.75      1.75      1.72
            WIBOR=>                                  
 Note: FRA  are for ask prices                               
 quotes                                              
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 (Reporting by Reuters buros
Editing by Helen Popper)
  
 
 
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