KBC Market Research Desk
KBC Bank
Despite rising geopolitical tensions, Central European markets have remained calm. Stock prices have suffered only marginally and also currencies have stayed stable, in contrast to the Russian rouble, which fell sharply yesterday in anticipation of new sanctions against Russia to be adopted by the United States and the EU.
We believe that the new sanctions may worsen sentiment on global markets and consequently weigh on the CEE currencies but all in all they should not pose a serious threat for the Central European economies.
The most important trading partners for the CEE, Germany in the first place, lie in the EU. Exports to Russia make up only 3-4 % of total exports of the Czech Republic, Poland or Hungary and Russia ranks on place 14 to 20 among their major foreign outlets. The next set of sanctions is expected to focus on the banking sector. Nor in this area Poland or the Czech Republic appear to be exposed to significant risk. Hungary’s exposure is somewhat higher, due to the OTP bank, not as high nevertheless as to trigger a banking crisis. To sum up: as long as gas and oil supply are not abruptly interrupted, economic sanctions against Russia should not seriously threat CEE economies.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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