CEE Stocks and COVID-19: Q2 Special Report on Stock Markets and Economic Conditions

By: The Quinnipiac University Economics Research Team, Michael Szwaja and Jack French

Photo by Andrew Kondrakov on Unsplash

With the second quarter of 2020 coming to a close, markets in Central Europe have been on the rise once again. The returns from April 1st to the end of June are listed below with all CEE markets showing strong positive performances.

Slovakia’s SAX fell substantially during the last few days of June otherwise its return would have been more in line with the others. The SAX gained 3.89% after being as much as 11% up only a few days before the quarter’s close. The Polish WIG 20 rose 16.26% and narrowly beat out the Czech PX for the top spot among the CEE indices. The PX gained a nearly identical 16.22%. The Romanian BET finished up 13.13% and the Hungarian BUX rose 10.21%.

CEE second quarter stock market returns

Markets rose at an incredible pace from April through June. However, expanding our perspective to include the month of March, or even late February, shows that the rally was still not large enough to offset the carnage done earlier at the beginning of the COVID outbreak. Not one of the CEE indices closed June above its beginning of March level. The WIG 20 and the SAX are the only indices to have crossed that level at any point. The overall trend in CEE for the last three months remains overwhelmingly positive.

COVID 19 Cases

Cases per 100,000 in Central Europe

This graph shows Slovakia has had the lowest number of confirmed COVID-19 cases out of the CEE countries with Hungary having the second fewest. Romania had the most, Czechia the second most, and Poland’s cases were in the middle. Slovakia’s roughly 30 cases per hundred thousand is an extremely low percentage. Hungary and Slovakia appear to have done a good job decreasing the number of new cases while Poland, Czechia, and Romania appear to have been less successful. Total cases in those three countries are still increasing fairly linearly.

Cases per 100,000 in Central Europe, US, and UK

When compared to the United States and UK, however, the CEE countries have seen a relatively small number of cases even when accounting for differences in population size. Romania’s 140 cases per 100,000 people is less than a third of the UK’s nearly 500 cases per 100,000 while the US has just under 800 per 100,000 people. Additionally, the US has experienced a very steady rise in cases that no other country shares to the same extent.

A Closer Look

These graphs show each country’s respective index alongside their daily new cases per hundred thousand people. The spikes in cases don’t appear to be closely correlated to market movement for any of the countries suggesting that once the crisis set in, market participants separated health matters from economic ones to some extent.

The more likely scenario is that the initial shocks were related to fears about how severe the outbreak would be. Most CEE countries saw cases peak at some point in April. The Czech Republic had a recent surge in new cases but nothing near its earlier peak. Romania and Poland have also had mixed success in slowing down case numbers. Slovakia and Hungary have managed to maintain extraordinarily low numbers of confirmed cases.

The drop in new cases in Hungary and Slovakia fits with their relatively flat total case graphs. Poland hasn’t really fallen below its case numbers from April and May. Romania briefly saw a decrease in cases but has since reversed the trend over the past month. The Czech Republic looked much like Hungary until the last week or two of June when case numbers shot back up. The UK appears to have decreased the number of new cases significantly but not as quickly as some of the other countries. The US is the outlier here with its peak in new cases coming at the end of June rather than back in April. The US stock market, however, is the only one to close June above where it was at the beginning of March. The market is still down from its peak in February, but has exhibited an extremely strong recovery.

Stock Markets and Covid Cases By Country

Immediate Economic Impact, Near-term Outlook

GDP growth for 2020 is projected to be negative across Central Europe. Czechia is set to fare the worst with a 6.5% contraction while Slovakia is not far behind at -6.2% growth. Romania’s economy is projected to shrink by 5%, Poland’s by 4.6%, and Hungary’s by 3.1%. This comes after a year of sizable economic growth across the region. GDP growth in 2019 ranged between 2.3% and 4.9%. The US and UK are projected to lose 5.9% and 6.5% of GDP respectively.

Unemployment numbers in the region are similarly poor, with all the CEE countries seeing unemployment rates rising month over month. Slovakia is experiencing the highest unemployment rate at 7.5% followed by Poland at 6.7%, Romania at 6.5%, Hungary at 5.5%, and Czechia at a relatively low 3.8%. US unemployment peaked in April at 14.7% and has since gone down to 11.1%. The UK just reached 6% unemployment in June and has been steadily rising similarly to the CEE countries.

Economic Growth: 2020 Projected Real GDP (%Change)

Unemployment Rates

* = Projection (TEForcast)

**= Actual Data


Countries across Central Europe have seen a rise in unemployment paired with falling GDP forecasts and volatile stock markets. The challenges of the last quarter were not limited to the region. The US has seen a far higher number of confirmed cases as a percentage of population as well as unemployment levels greater than anything seen in CEE or even the UK. GDP forecasts for the US are roughly in line with the CEE countries yet the US stock market has outperformed the rest both in terms of second quarter returns and post outbreak returns.

Slovakia has had the fewest confirmed cases per hundred thousand people but the highest unemployment and one of the worst expected GDP contractions suggesting a strong lockdown. Hungary has managed to have nearly as low a number of cases with lower unemployment and a much better GDP forecast which could be due to many factors but governmental stimulus is likely among them.

Poland and Romania are in difficult spots since their unemployment rates are high and GDP forecasts poor, but they’re still seeing high numbers of new cases. Poland, however, hasn’t had much in the way of an increase in unemployment since their rate was higher than the rest to begin with. Czechia had gotten the new cases down to a pretty low level without letting unemployment get too high, but a recent spike is worrying. It’s difficult to draw too many conclusions from this data, but a positive takeaway is that a number of CEE nations have managed to cut new cases without seeing massive spikes in unemployment. In comparison, the US is still experiencing increasing new cases and has an equally poor GDP forecast with much worse unemployment.


· Slovakia Unemployment https://tradingeconomics.com/slovakia/unemployment-rate

· Hungary Unemployment https://tradingeconomics.com/hungary/unemployment-rate

· Poland Unemployment https://tradingeconomics.com/poland/unemployment-rate

· Czech Unemployment https://tradingeconomics.com/czech-republic/unemployment-rate

· Romania Unemployment https://tradingeconomics.com/romania/unemployment-rate

· United States Unemployment https://tradingeconomics.com/united-states/unemployment-rate

· United Kingdom Unemployment https://tradingeconomics.com/united-kingdom/unemployment-rate

· Stock data from Investing.com

· COVID case data from World Health Organization

· GDP data from IMF’s June 2020 World Economic Outlook


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