CEE Bond Markets Outlook

12 Octombrie 2010

RAIFFEISEN BANK S.A.

 

Highlights

Poland – We think that the risk of downward drift in leading indicators in the USA will eventually have a negative impact on PLN and bond yields. In addition to that, consumer sentiment in Poland has been worsening in the last two months. We still do not see any catalysts for considerable upward movements in bond prices and leave our "Sell" recommendation unchanged.

Hungary – The Hungarian government started next year's fiscal planning after the widely anticipated win in the municipal elections. According to a local newspaper, the main structure of the package is accepted with some PIT-easing accounting for HUF 400 bn, while on the other hand new extra taxes will be introduced on the energy and telecom sectors.

Czech Republic – Czech domestic data confirmed the relatively good condition of the Czech economy. Industrial output rose almost 13% yoy in August, driven by foreign orders, which also show a good chance for solid results in the near future. Industrial growth mirrors the growth in exports. On the other hand, strong imports from non-EU countries have been driving the foreign trade balance down. Growth in imports has outpaced export growth for six months in a row.

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