beyondbrics

Central and eastern European stock markets were broadly positive on Monday, showing resilience to poor US jobs data on Friday.

In Russia, the ongoing wheat crisis failed to drag down the country’s equities, with the Micex Index seeing its biggest rise in a week. The Micex closed afternoon trading up 1.2 per cent at 1,419.20, although the emergency scenario in Moscow did mean the volume of deals hit a month-long low.

Norilsk Nickel, the world’s biggest nickel miner, rose 3.1 per cent, after the government said it would not purchase shares to ease a dispute between the company’s owners.

Ivan Mazalov, of Prosperity Capital management, said that the fiscal deficit explained the government’s reticence, which is consistent with its plan to sell some state assets. “It is not a good moment for the state to buy into new assets. They need to plug budget holes and generally the time has come for the government to sell rather than buy,” he told Reuters.

However, the Russian rouble did weaken, losing 0.5 per cent against the dollar to trade around 29.9, due to uncertainty surrounding the wheat crisis. The currency has risen recently, thanks to the resurgent oil price.

In Romania, the Bucharest stock exchange gained 1 per cent to 5,220.72. The government sold 1.3bn lei ($407m) in 6-month treasury bills in an auction, more than planned. The yield was 6.99 per cent, despite the central bank governor having stated on Friday that the finance ministry’s 7-per-cent cap should be reconsidered.

In the Czech Republic, it was announced that July inflation was 0.3 per cent compared to the previous month, roughly in line with forecasts. The Prague index was flat at 1,119.50, while the Czech crown rose 0.3 per cent against the dollar. GDP data to be released on Friday is expected to buoy investors.

“The main risk for the Czech Republic is its strong dependence on external demand. But [we] continue to see strong recovery in Europe, especially in Germany,” said Magdalena Polan of Goldman Sachs commented.

In Turkey, the ISE 100 rose 0.2 per cent to 59,885.66, recovering some ground lost late last week. The Turkish lira gained 0.3 per cent against the dollar to 1.9746.

In Hungary, the Budapest stock exchange closed up 0.5 per cent at 23,019.81, with oil and gas stocks rising. OTP bank also rose slightly, ahead of earnings later this week, despite the nation’s financial regulator announcing that overdue loans had risen nearly 9 per cent in the first quarter. Many Hungarian companies and households have taken out loans in Swiss francs, and are being hit by the poor performance of the forint, which has lost 27 per cent against the franc since 2008.

The Polish WIG20 did lose ground, however, with financial stocks dragging it down 0.8 per cent to 2,528.42. The country’s largest insurer, PZU, fell 3.3 per cent, as it copes with claims from recent floods in the region.