UPDATE 1-CEE MARKETS-Stocks plummet; Hungary scraps some bond auctions as coronavirus turmoil escalates

Larry King and Susan Fenton)

coronavirus turmoil escalates@ (Adds Hungary bond auction) BUDAPEST, March 12 (Reuters) - Central European stock markets plunged to multi-year lows on Thursday, led by 8% declines in both Budapest and Warsaw, after U.S. President Donald Trump imposed strict limits on travel from Europe in a bid to halt the spread of the coronavirus. Hungary scrapped a 10-year and 20-year bond auction on Thursday and sold less than planned of five-year bonds as bids dwindled amid high volatility and uncertainty in markets. "The forint has started to weaken and yields climbed upwards today," a Budapest dealer said, adding that overnight interbank rates also ticked upwards. "If we look at this bond auction positively then we can say the debt agency can afford not accepting bids, and if we look at this negatively then this auction has failed," he said. Hungary sold 17 billion forints ($56.5 million) worth of five-year bonds, below its 20 billion offer and significantly less than the original 60 billion forints the tenders intended to raise. Warsaw's blue-chip index slumped 8.2% to its lowest since mid-2009. The Prague index fell more than 5% to its lowest since July 2016. Budapest was at its lowest since May 2017 as investors digested Trump's unexpected move to restrict travel from Europe and awaited the European Central Bank's statement and press conference after a policy meeting on Thursday when it is expected to announce stimulus measures. The stocks of Central Europe's largest independent bank, OTP Bank plunged more than 16% below the 10,000 forints threshold before regaining some ground to trade at 10,340 forints, still down 12.6% at 1104 GMT. Shares of Polish bank Pekao fell 8.3%. "The volatility of zloty and forint exchange rates shot up and stock markets in Poland and Hungary were battered amid fresh fears of virus spread, which led to both countries declaring states of emergency and suspending key economic activities," Commerzbank said in a note. The Czech Republic was also introducing controls on its borders with Germany and Austria and banning crossings away from official frontier border posts to help fight the spread of the coronavirus, Interior Minister Jan Hamacek said on Wednesday.

The ECB is all but certain to introduce new stimulus measures on Thursday, pushing policy closer to its limits to help the euro zone economy cope with the shock of the coronavirus pandemic. "The only question is, how far-reaching the package of measures will be," Commerzbank analysts said. "Will the ECB get the bazooka out again and surprise the market with far-reaching measures or will it disappoint the market?" Hungary on Wednesday banned inbound travel from Italy, South Korea, Iran and China for non-Hungarians in response to the coronavirus outbreak. Analysts were increasingly drawing parallels with the 2008 global financial crisis and assessing the expected economic fallout globally. "In CEE FX, all currencies depreciated against the EUR," Morgan Stanley said. "Hungary was the only country in CEE where the market did not imply easing but that is no longer the case after Wednesday. Moreover, the government declared a state of emergency due to Covid-19, shutting universities and restricting travel from certain countries." The region's currencies all weakened, with the Czech crown losing almost 1%, as markets weigh whether the central bank will reverse its recent interest rate tightening as the economy comes under strain. "EUR/CZK has been or maybe still is a very crowded trade, so it is now under biggest pressure from CEE3, and of course (there is) a lot of space for cutting rates as well even if this is not an imminent threat probably," a dealer said. Romanian lawmakers meet late on Thursday to decide whether to give their vote of confidence to designated Prime Minister Florin Citu's government. Citu's minority Liberal Party has been trying to trigger early elections. His cabinet was initially expected to lose the vote, but chances for a positive vote have increased as the spread of coronavirus cases has heightened the need for political stability rather than upheaval.



Latest Previous Daily Changebid close change in 2020Czech 26.0030 25.7600 -0.93% -2.20%


Hungary 337.1600 336.2500 -0.27% -1.78%


Polish 4.3435 4.3162 -0.63% -2.01%


Romanian 4.8170 4.8189 +0.04% -0.60%


Croatian 7.5550 7.5755 +0.27% -1.45%


Serbian 117.6300 117.6300 +0.00% -0.05%


Note: calculated from 1800 CET

daily change

Latest Previous Daily Changeclose change in 2020Prague 852.63 885.1000 -3.67% -23.57%Budapest 33633.04 36536.24 -7.95% -27.02%Warsaw 1381.31 1505.64 -8.26% -35.76%Bucharest 7822.77 8381.47 -6.67% -21.59%Ljubljana 759.65 827.84 -8.24% -17.95%Zagreb 1429.47 1591.42 -10.18% -29.14%Belgrade <.BELEX15 732.91 752.28 -2.57% -8.58%>Sofia 464.98 495.12 -6.09% -18.16%Yield Yield Spread Daily(bid) change vs Bund change


Czech spread


2-year <CZ2YT=RR 1.6130 -0.2300 +263bps -18bps>5-year <CZ5YT=RR 1.1330 -0.0060 +210bps +4bps>10-year <CZ10YT=R 1.1040 -0.0280 +190bps +2bps

R> Poland

2-year <PL2YT=RR 1.3440 0.1110 +236bps +17bps>5-year <PL5YT=RR 1.7660 0.2830 +273bps +33bps>10-year <PL10YT=R 1.8330 0.1200 +263bps +17bps


3x6 6x9 9x12 3M

interban k

Czech Rep < 1.82 1.38 1.05 2.33


Hungary < 0.57 0.56 0.60 0.66


Poland < 1.39 1.11 0.98 1.69

WIBOR=> Note: FRA are for ask prices quotes



($1 = 301.0500 forints)

(Additional reporting by Jason Hovet and Alan Charlish, editing