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The Regions This Week
August 25, 2017 www.intellinews.com I Page 5
Central Europe
So far, 2017 has been the best year for Cen- tral European equities since 2012. The CECE Composite, an index provided by Vienna Stock Exchange that reflects the performance of the 28 largest stocks listed in Warsaw, Prague and Budapest (CEE3 thereafter) gained 22% from the start of the year to August 15.
The Czech cabinet agreed to raise the minimum wage by 11% to CZK12,200 (€468) from the start of 2018. The new level represents 40.5% of the average wage. The ruling Social Democrats – which are facing a difficult re-election battle in October – have been pushing for an increase in the minimum wage as part of a new more leftwing programme to counter the appeal of their populist coalition partners Ano. The increase in the mini- mum wage is the sixth in as many years.
Confidence in the Czech economy in August was the highest since the start of the year. The Au- gust figure was one point higher as compared to the previous month, reaching 98.7 points.
Private investment group R2G Rohan Czech an- nounced the start of a voluntary takeover bid for shares of Czech textile company Pegas Nonwo- vens at CZK 1,010/share. The offer has won the support of Pegas’ board of directors. R2G Rohan Czech owns 10.83% of shares of Pegas. The stock closed at CZK1,019 shortly after, indicating share- holders expect the bid price to rise.
Czech utility CEZ, which owns a regional elec- tricity distribution company in Bulgaria, re- ceived several binding offers for its business. CEZ CEO Daniel Benes has said that the company would decide by September whether to stay in Bulgaria or sell the business.
Hungarian gross wages grew at the fastest pace in 11 years, up 14.4% in June, to stand at HUF297,300 (€978). The reduction in personal income tax from 16% to 15% from January 1, on top of persistently low inflation, is also having a positive impact on net
wage growth, which also pushed 14.4% higher in June to HUF197,700. Private sector wages rose at the fastest pace since 2006, up 13.5% y/y.
Hungarian retail sales grew 5.2% y/y in June,
according to final data released by statistics of- fice KSH. Sales grew 5.7% y/y when adjusted for calendar effects. The detailed data was revised downward from 5.5% and 6% respectively.
The deficit of Hungary’s central budget rose by HUF476bn in the first seven months as the coun- try's forint debt went up, whilst foreign-currency denominated debt declined further. During the period, Hungary’s forint debt rose by HUF1.17tn to HUF19.5tn and as a result its share of the total rose to 75.6% from 72.5% at the end of the year.
The Hungarian Government Debt Management Agency AKK sold HUF22.5bn (€74mn) worth of 12-month T-bills and HUF7.5bn of five-year float- ing rate bonds at an auction on August 24. Bids for the 12-month security amounted to HUF38.3bn, a modest rise from the HUF27bn two weeks ago. The average yield was 0.07%, 2bp below that achieved at the last sale of the maturity and the same as the secondary market benchmark.
The Croatian government adopted a decision on selecting an investment advisor for the possi- ble purchase of MOL’s stake in local oil and gas group INA. Croatia owns a 44.85% stake in INA, while MOL holds a 49.1% stake and management rights. Budapest and Zagreb have been battling over the company for years, with the Croatian side insisting control was handed over illegally via an alleged bribe to former PM Ivo Sanader.
Lithuanian industrial production continued to slow in July, falling by 0.9% m/m, and push-
ing growth down to 5.0% y/y. Analysts argue the slowdown may only be temporary and production will accelerate again, given strong exports figures, improved industrial and overall economic senti- ment, and accelerating industrial producer prices.