By: The Quinnipiac University Economics Research Team, Jack French
Markets were up and down across Central Europe over the past two weeks but rallied from end of July through Friday’s close. The UK FTSE came in trailing all CEE indices with a loss of about a percent and a half. The Czech PX performed slightly better with a loss of just under a percent and was the only CEE index to fall over the two weeks. The Polish WIG 20 had a modest gain of about a quarter of a percent and was just barely beaten by the Romanian BET which posted an almost identical but slightly better gain. The Slovakian SAX and Hungarian BUX rose late in the week to lead the way. The SAX gained just under two percent and the BUX just over two percent. With a gain of more than four percent the US S&P 500 led all indices by a substantial amount.
Source: Own calculations based on data collected from each index. This graph shows the performance of each index with the reference date of February 17th.
Of the two trends identified in the most recent report, one continued and one reversed. While CEE markets did well over the last two weeks, the US market outperformed all of them. The recovery in the US S&P is so far ahead of the CEE indices and the UK market that it’s now within one percent of its pre outbreak high while the CEE markets are averaging 17% losses. So while that trend is continuing, a recent spike in the Hungarian BUX began to close the gap between it and the other markets in the region. The BUX had been steadily declining since mid-June while most indices were staying pretty flat. The SAX is still leading CEE markets in terms of recovery but is now nearly five percent behind the S&P.
Looking at markets over the last three months shows the growing gap between markets in the US and Central Europe. The S&P has gone up steadily, with some interruption, while all other indices peaked around June 7th and have yet to revisit that level. Many, including the Romanian BET and Hungarian BUX, are now four to five percent lower than they were two months ago. It would now take a sizable move or many small shifts for the now massive gap between the US and CEE markets to shrink by much.
Source: Own calculations based on data collected from each index. The first graph shows the previous week’s performance. The remaining graphs show the three-month performance of each of the indices.