×

CEE MARKETS-Romanian stocks under-perform as government shows tax plans

BUCHAREST/PRAGUE, June 29 (Reuters) - Romanian stocks under-performed emerging European peers in early Thursday trading as the new government tabled an ambitious new tax plan including corporate tax changes before heading for a Parliament confidence vote it was widely expected to pass. The ruling Social Democrats plan to replace a flat 16 percent corporate tax on profit with a multi-leveled tax on turnover and introduce "a solidarity contribution" next year, a revised governing program showed. Designated Prime Minister Mihai Tudose was picked as prime minister after ruling parties sacked premier Sorin Grindeanu on June 21 for failing to implement an ambitious program that helped them win a December election. A majority of ministers from the ousted cabinet feature in the new government lineup. It is likely to receive approval given the comfortable parliamentary majority held by the ruling Social Democrat Party (PSD) and its junior partner ALDE. The confidence vote is expected later on Thursday. The overall impact from the new governing program remains to be seen but initial market reactions show negative expectations for equities. The leu was flat after a session of above-market gains on Wednesday, and other currencies were also broadly unchanged. Politics is expected to impact the Romanian unit in the longer term, an analyst said. "Even if this brings an end to the government crisis for now, politics remain a factor of uncertainty in Romania," Commerzbank said in a note. "The case of the previous government illustrated just how quickly Dragnea can withdraw his support." "Focus is now likely to increasingly rest on the positive fundamental environment, and we see appreciation potential for RON," it added. The Czech central bank is widely expected to maintain its key interest rate unchanged near zero on Thursday but its first rate hike in about a decade is getting closer and could come before the year's end rather than next year as previously expected, a Reuters poll showed on Monday. While the bank's own outlook indicates a hike may come in the third quarter, several board members, including Governor Jiri Rusnok, have said the tightening might come after that if the crown currency appreciates significantly. Still, markets are not yet pricing in a hike this year. "So the CNB is much more hawkish than the market," a rates dealer said.

CEE MARKETS SNAPSH AT 0911 CET

OT CURRENCIES

Latest Previo Daily Change

us

bid close change in

2017

Czech crown 26.290 26.302 +0.05 2.73% 0 5 % Hungary 309.75 309.74 +0.00 -0.30% forint 00 00 % Polish zloty 4.2355 4.2325 -0.07% 3.98% Romanian leu 4.5501 4.5502 +0.00 -0.33%

%

Croatian 7.4110 7.4115 +0.01 1.94% kuna % Serbian 120.87 120.96 +0.07 2.05% dinar 00 00 % Note: daily calculated previo close 1800 change from us at CET

STOCKS

Latest Previo Daily Change

us

close change in

2017

Prague 980.63 977.22 +0.35 +6.40 % % Budapest 35502. 35455. +0.13 +10.9 64 97 % 4% Warsaw 2349.5 2327.6 +0.94 +20.6 9 8 % 2% Bucharest 8153.9 8168.3 -0.18% +15.0 5 7 9% Ljubljana 0.00 794.79 +0.00 -100.0 % 0% Zagreb 0.00 1877.7 +0.00 -100.0 1 % 0% Belgrade 0.00 709.83 +0.00 -100.0 % 0% Sofia 703.08 702.21 +0.12 +19.8 % 9%

BONDS

Yield Yield Spread Daily (bid) change vs change Bund in Czech spread

Republic

2-year 0.049 0 +062b -4bps

ps

5-year 0.054 0.106 +032b +7bps

ps

10-year 0.92 0 +051b -6bps

ps Poland

2-year 1.929 0.009 +250b -3bps

ps

5-year 2.716 0.085 +298b +5bps

ps

10-year 3.359 0.073 +294b +1bps

ps

FORWARD RATE AGREEMENT 3x6 6x9 9x12 3M

interb ank

Czech Rep <PR 0.34 0.42 0.51 0

IBOR=>

Hungary <BU 0.19 0.2 0.2 0.15

BOR=>

Poland <WI 1.749 1.79 1.82 1.73

BOR=>

Note: FRA are for ask quotes prices ********************************************************* *****

(Reporting by Reuters bureaus, writing by Marton Dunai, editing