CEE Stock Market Report for November 2 – November 13

By: The Quinnipiac University Economics Research Team, Jack French

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.

CEE markets soared back from the multiple-month low that some were experiencing just a few weeks ago. Still, they are well below where they were prior to the COVID pandemic. The last two weeks were the strongest of the year for many and resulted in something of a convergence among indices. The Romanian BET, which had been one of the leaders for the market recovery in the CEE region, had a very modest relative gain. On the low end, the BUX and WIG made large gains and are now very tightly grouped along with the Czech PX and UK FTSE. The US market rose as well and now sits near its all-time highs roughly five percent above its pre-pandemic level.

Despite growing coronavirus case numbers, markets are rallying, some for the first time in months. The BUX and FTSE are at three month highs and the PX and S&P are close to theirs. Whether this new momentum can be sustained is hard to say, especially considering how bleak the outlook was just a few weeks ago when the WIG and BUX were at or near their lowest points in five months. The main issues to monitor would be the likelihood and efficacy of upcoming vaccines and the economic response to rising COVID cases. More lockdown measures without fiscal or monetary stimulus will likely be a major negative for markets. Alternatively, any news of a vaccine can spark excitement both in Central Europe and globally.

Source: Own calculations based on data collected from each index.

The past two weeks were enormously positive for markets in Central Europe and elsewhere. With by far their best gains in months, the Hungarian BUX jumped seventeen percent while the Polish WIG 20 was not far behind. The UK FTSE rose roughly fourteen percent. The US S&P and Czech PX both rained eight percent, and the Romanian BET had a more modest rise of four percent. The Slovakian SAX was an outlier by a wide margin. It was the only index to lose ground over the two weeks and fell over five percent. Positive vaccine developments are being touted as the likely culprit for the recent wave of optimism. Interestingly, these two weeks were something of a reversal of recent trends with the BUX and WIG booking the largest gains after being the two worst performing CEE indices during the pandemic so far.

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.


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