News
CEE: Neutral – EC cuts 2012 GDP forecasts for the region, Poland remains clear outperformer (p1)
BG: Neutral – Dec gross external debt down 0.8% mom (p2)
PL: Positive – Jan retail sales rose by 14.3% yoy (p2)
RO: Mixed – Jan banking deposits grow 0.4% mom / Govt. sells RON 122mn 15Y T-Bonds (p2)
Today’s Events
CZ: Feb manufacturing confidence indicator / HR: 4Q GDP / HU: Dec retail trade / SL: Jan PPI / SRB: Jan gross wages / TK: Feb real sector confidence index
EEMEA Markets
EM bond fund flows and CEEMEA regional weights: data published this morning by EPFR shows that flows into EM dedicated funds remained strong. Hard currency funds received USD 481mn inflow after USD 532mn whilst local currency dedicated funds saw an inflow of USD 275mn after USD 236mn inflow in the previous week. Similar to the previous weeks hard currency funds dominated as credit markets appear to offer better values with spreads still at relatively elevated levels compared to local currency yields.
Given the CEEMEA region remains underweight in the funds allocations we believe this backdrop will continue to support our region. At the end of 2011 the total aggregated weight of the CEEMEA region in the local currency funds was only 25.7% whilst over the last 5Y the average allocation was almost 10pct higher than this. In the hard currency funds the extent of underweight positioning is somewhat less extreme. At the end of 2011 hard currency funds allocation to CEEMEA region stood at 23% versus a longer term average allocation of 27%. The data and event calendar is very light today in the CEEMEA region hence markets will be driven by external factors.
Poland remains the main outperformer of the whole EU according to EC forecast: yesterday the European Commission published the detailed spring forecast where they cut 2012 GDP forecast for CEE countries. Czech Republic GDP growth forecast was cut the most to 0% from 07% yoy for 2012. Hungary was reduced to negative 0.1% from +0.5% yoy and Romania was cut to 1.6% from 2.1% yoy. Poland remains the main outperforming as the 2012 GDP forecast was left unchanged at 2.5% yoy. This number is not only the highest in CEE but highest in the whole EU
Click here to read the full report: EEMEA daily 240212
Gyula Toth
UniCredit Research