KBC Market Research Desk
KBC Bank
Regional Overview
Macro, FX & Rates: Is the Czech koruna overbought?
(CZ) FX: It seem that the final countdown for CNB's exit from it intervention regime has just begun, because the end of the first quarter, which the date when ends the CNB ‘hard' commitment to hold the EUR/CZK above 27.00, is coming closer. In this respect it might be worth to look at speculative inflows into the Czech Republic. In our view details from the Czech balance-of-payments indicate that hot portfolio flows into the economy have been high and they significantly exceeded the Czech current account surplus + FDI inflows (see chart).This might indicate the koruna is already overbought.
Equities: CEZ production outlook exceeded expectation
(CZ) CEZ – Conference Call summary: CEZ expects significant increase in nuclear power generation from 24.1 TWh to 28.0 TWh in 2017 on back of shorter outages. CEZ expects just a small price increase (<5 EUR/t) of CO2 prices till the end of the decade. Regarding the dividend CFO said that the final decision is in hand of major shareholder at AGM in June. The proposed dividend of CZK 33/share of a given year's profits affects the Net Debt/EBITDA ratio in 2017, which should rise to 2.5x according to CEZ. In our pre-results recommendation update on CEZ. Production outlook exceeded our expectation, nevertheless the total expected generation exactly matched our anticipation of 64 TWh.
(HU) OTP has circa USD 1bn ready for M&A in CEE and is prepared to take on debt for purchases if need be. At the moment OTP is about to close a deal for a "locally important" bank in Montenegro and also is in talks to purchase a lender in Ukraine/ TO WATCH. According to the company, Tier-1 ratio would have climbed to some 18.5% by the end of 2017, well above 12.5% target. Already in December, OTP bought Societe Generale SA's Splitska Banka in Croatia. OTP also mentioned that in case it fail to make an acquisition this year, its management would have to consider whether to buy back shares or boost dividend payments ahead of next year's shareholder meeting.
| LAST | PREVIOUS | CHANGE (%) | |
| EURCZK | 27.02 | 27.02 | 0.00 |
| EURHUF | 308.7 | 308.4 | 0.07 |
| EURPLN | 4.281 | 4.275 | 0.13 |
| LAST | PREVIOUS | CHANGE (bps) | |
| CZGB 10Y | 0.945 | 0.947 | -0.2 |
| HUGB 10Y | 3.57 | 3.58 | -0.3 |
| PLGB 10Y | 3.69 | 3.69 | 0.0 |
| LAST | PREVIOUS | CHANGE (%) | |
| PX | 982.7 | 982.7 | 0.00 |
| BUX | 32044 | 32044 | 0.00 |
| WIG | 59453 | 59453 | 0.00 |
Download The Full European Economic Review
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.
Recommended Content
Editors’ Picks
EUR/USD edges lower toward 1.0700 post-US PCE
EUR/USD stays under modest bearish pressure but manages to hold above 1.0700 in the American session on Friday. The US Dollar (USD) gathers strength against its rivals after the stronger-than-forecast PCE inflation data, not allowing the pair to gain traction.
GBP/USD retreats to 1.2500 on renewed USD strength
GBP/USD lost its traction and turned negative on the day near 1.2500. Following the stronger-than-expected PCE inflation readings from the US, the USD stays resilient and makes it difficult for the pair to gather recovery momentum.
Gold struggles to hold above $2,350 following US inflation
Gold turned south and declined toward $2,340, erasing a large portion of its daily gains, as the USD benefited from PCE inflation data. The benchmark 10-year US yield, however, stays in negative territory and helps XAU/USD limit its losses.
Bitcoin Weekly Forecast: BTC’s next breakout could propel it to $80,000 Premium
Bitcoin’s recent price consolidation could be nearing its end as technical indicators and on-chain metrics suggest a potential upward breakout. However, this move would not be straightforward and could punish impatient investors.
Week ahead – Hawkish risk as Fed and NFP on tap, Eurozone data eyed too
Fed meets on Wednesday as US inflation stays elevated. Will Friday’s jobs report bring relief or more angst for the markets? Eurozone flash GDP and CPI numbers in focus for the Euro.