bne IntelliNews – Stock markets in central and southeastern Europe jump in anticipation of a COVID-free future

Major stock markets in central and south-eastern Europe surged in mid-November on a series of positive reports of vaccine trial successes that raised hopes that the disruption caused by the coronavirus (COVID-19) was ending. could arrive within a few months.

The performance of major stock indices in Warsaw, Prague, Budapest, Bucharest and elsewhere mirrored the global trend, with major international indices also hitting highs not seen in several months. Among them, the Dow Jones climbed to pre-pandemic levels, while the FTSE-100 hit its highest level since June.

The first boost came in the second week of November, when initial results from US pharmaceutical giant Pfizer’s phase three trials of its vaccine showed it was more than 90% effective against the virus. This news came shortly after Democratic candidate Joe Biden was declared the winner of the US presidential election; shares had already begun to rise during the count as it became increasingly clear that the United States was headed for a Biden presidency.

It was quickly followed by news from Moderna about its COVID-19 drug, which was found to be 94.5% effective in trials, sparking a further rise in markets, with aviation stocks in particular rallying.

From COVID businesses to hospitality and retail in Warsaw

The main indices of the largest and most liquid stock exchanges in the Central and Southeastern European region mirrored the global trend.

The wave of optimism over the vaccine news has led to an improved mood on the region’s largest stock exchange, the Warsaw Stock Exchange. The main index, WIG, has risen 12.41% over the past four weeks, despite the rapid spread of the virus in Poland recently, which has led the government to tighten restrictions and urge Poles to avoid travel from Christmas.

The Warsaw Stock Exchange’s main index, WIG, has risen 12.41% over the past four weeks.

Analysts also noted that the vaccine news led investors to buy the shares of companies that had suffered from the lockdown and various subsequent forms of COVID-19 restrictions, such as restaurateur AmRest, shoe retailer CCC, clothing retailer LPP or travel agent Rainbow.

On the other hand, investors have started selling shares of companies that have performed well under the circumstances of the pandemic, such as online retailer Allegro, gaming giant CD Projekt and maker of gloves and face masks. Mercator medical protection, one of the so-called COVID companies that has rallied during the pandemic.

The Prague PX is getting stronger

The Prague Stock Exchange’s PX index strengthened on November 10, closing above 900 points for the first time in two months, up 1.23% to 904.38 points.

The Prague Stock Exchange’s PX index has strengthened since November 10th.

This was mainly driven by banking stocks; Komercni Banka and Erste Bank grew respectively by more than 4% and 3%. As in Poland, companies that had previously received a pandemic boost fared less well, including nonwoven fabric producer PFNonwovens, which primarily serves the personal hygiene products market. As the pandemic spread across Europe, PFNonwovens launched new production of face masks in response to the growing demand for personal protective equipment (PPE).

According to Fio Bank analyst Josef Dudek, the development of the Prague Stock Exchange was affected by the previous day’s report on the successful testing of Pfizer’s coronavirus vaccine. “This means that the financial sector in particular has progressed to higher levels, while technology has failed,” he said, as quoted by the Czech News Agency.

Meanwhile, tech company Avast broke its daily losses in the final auction and eventually added a slight 0.36% to CZK 137.70. The richest Czech Petr Kellner’s O2 operator rose less than half a percent to 227 CZK.

Since then, the rise has continued. On November 18, the index reached its strongest growth since mid-July. The biggest increase was recorded by Moneta Money Bank, up 2.7% to CZK 64.70, followed by Erste Group by 2.29% to CZK 625.2 and Komercni Banka by 1.39% to CZK 584. .

Hungarian Richter driven by vaccine news

The Budapest Stock Exchange’s main BUX index ended the week ending November 20 up 2.33% to 38,205 points. Markets have remained on an uptrend since the US election as the benchmark rose 32,000 points.

The Budapest Stock Exchange’s main BUX index ended the week ending November 20 up 2.33% to 38,205 points.

One company to watch is Richter, Central and Eastern Europe’s leading pharmaceutical group, whose shares rose 5.8% to HUF 6,975 at the end of the week. The company started the week on a positive note despite bad news from the European Medicines Agency (EMA), which recommended the restricted use of its original flagship drug Esyma. Analysts said news of Moderna’s vaccine boosted the stock price on Nov. 16. Richter extended its gains mid-week after Pfizer reviewed the effectiveness of its own vaccine.

The Hungarian pharmaceutical company reportedly supplied enough doses to Hungarian hospitals to treat 5,000 patients with the COVID-19 drug Remdesivir last week, after the government had already ordered some 3,000 doses in the spring. Earlier in the month, Richter announced record sales for the first nine months on the back of higher sales in the United States. The stock price moved in a wide range from 6,300 HUF to 7,000 HUF over the 20 days.

Bucharest benefits from the upgrade of emerging markets

Southeast Europe’s largest stock exchange, the Bucharest Stock Exchange (BVB), reached an important milestone in September when it held its first session as an emerging market following a decision to upgrade. long-awaited level of FTSE Russel. The September 21 session, the BVB’s first as an emerging market, also marked the inclusion of Romania’s top two companies, Nuclearelectrica and Banca Transilvania, in the FTSE Global Equity Index (GEIS) series.

A statement from the BVB on October 12 indicates that the upgrade had an immediate impact, with average daily liquidity having increased by 3.5 times in September compared to August 2020, and 25 million euros. A month later, on November 16, the BVB reported that even amid the drop in sentiment caused by the second autumnal wave of the pandemic, the total value of transactions in the first 10 months of 2020 exceeded the figure reached for all of 2019.

From December 1, MSCI will move Kuwait into the Emerging Markets League, which will increase the share of BVB companies in the MSCI Frontier Markets 100 Index. Their weight in the MSCI Index will increase from 8% to 10.26 % in five stages over one year, according to the agency’s simulations. Thus, exchange-traded funds (ETFs) that track the index acquire Romanian stocks to reflect the new structure of the stock basket.

Under these conditions and in a positive international environment for the stock markets, the BVB indices rose and the BET blue chip index marked a rise of 13.4% during the first 24 days of November. Compared to the pre-crisis peak of January-February, the index is still lagging 8.6%, which is roughly in line with the momentum of the Euro Stoxx 50 which recorded a rally of 18.6% in November, but still lagging 9.3% compared to the pre-crisis. peak of crisis.

The leading index of the Bucharest Stock Exchange BET marked a rise of 13.4% in the first 24 days of November.

The month was marked at BVB, in addition to the increase in the weight of the MSCI, by the positive atmosphere created by the American elections and the success of the vaccine news; this meant a return to the best performances seen over the period since the February-March plunge, but not yet to pre-crisis levels. The quarterly financial reporting season, however, threw some cold water on sentiment as some companies fell short of expectations.

Zagreb’s Crobex10 at highest level since March crash

Among South East Europe’s smaller stock exchanges, the Zagreb Stock Exchange’s two main indices, Crobex and Crobex10, rallied on November 16, with the Crobex10 hitting its highest level since before the pandemic-induced crash in March.

ZSE data shows the Crobex was up 1.96% at 1,673 points on November 16 to its highest level since mid-June. The Crobex10 rose 1.88% to 1,048, a level not seen since early March.

The Zagreb Stock Exchange’s Crobex10 index rose 1.88% to 1,048 on November 16.

The price hike followed vaccine news from Moderna, as the launch of large-scale vaccination programs by next spring would mean a rebound for Croatia’s important tourism sector next summer, a vital part of the economy of the country. The rally in Croatian equities also came after Moody’s decided to upgrade Croatia to Ba1, just one notch below investment grade.

Trade activity and rising prices in the Baltic countries

The Nasdaq Baltic exchanges have seen an increase in trading activity and a decline in market prices due to the pandemic.

When news of the vaccine broke in mid-November, there was a slight increase in turnover and the number of trades executed in the market, as well as jumps in some of the Nasdaq Baltic indices. for example, the Baltic Benchmark Index (OMXBBGI), the Baltic 10 Index (OMXB10) and the Nasdaq Tallinn Index (OMXT) all jumped around 3% on November 9.

However, according to information from Nasdaq Baltic emailed to bne IntelliNews, it is difficult to say to what extent this was due to the vaccine. Moreover, the Nasdaq Riga stock market index (OMXR) does not seem to be affected by the news.

In addition, companies that depend on tourist flows such as Tallink and Novaturas have seen their prices increase. Tallink’s share price climbed 11.6% between Nov. 9 and Nov. 11. Novaturas’ share price rose 8.29% over the same period.

Regional fashion retailer Baltika saw increased prices and business activity. The first spike in business and price activity was due to a financial results announcement, while the second spike in price and business activity occurred around the time the vaccine news was released. .

Contributions from Iulian Ernst in Bucharest, Linas Jegelevicius in Vilnius, Wojciech Kosc in Warsaw, Clare Nuttall in Glasgow and Tamas Szilagyi in Budapest.