Czech Equity Daily: 07/06/10; Macro

...weakened on Friday, affected by negative news from abroad. Although the PX Index opened unchanged, it eventually fell by 4.03%, erasing the w/w growth. Investors' appetite was weak and buying volumes low. In contrast, selling volumes were solid, reaching almost CZK 3bn. Sell-offs were triggered by statements coming from Hungary regarding the bad condition of its economy and data falsified by the previous government. Hungarian finance minister softened the statements; their aim was to appeal to citizens in connection with political pressure. The US non-farm payroll data were worse than expected. Sell-offs affected mostly the banking sector. Erste Bank dropped from CZK 745 to CZK 677 (-9.37%); however, Komercni banka fell only by 0.8% (CZK 3,660). Other stocks that recorded losses included CME (-6% to CZK 530), VIG (CZK 818) and Orco. NWR found support at CZK 224 (-5.5%). Thanks to upcoming dividend payout, sellers stayed away from CEZ, which lost just 1.2% (CZK 898). Macro - Czech rating (Analyst: Petr Sklenar) Fitch Ratings on Friday revised the Czech Republic's sovereign rating outlook to "positive? from "stable?, maintain other ratings. The reason is the outcome of the parliamentary elections and a strong likelihood that a strong centre-right coalition will be formed, with a strong mandate for a faster pace of budget deficit reduction. We consider the new slightly positive and it confirms a positive reception of the elections results from abroad. As a reminder, before the elections some rating agencies mentioned potential ratings downgrade in case of victory of left-wing political parties due to their political programme.