November 27, 2009 October 22, 2014

Transcription

November 27, 2009 October 22, 2014
November
October 27,
22, 2014
2009
This is bne's Central Europe
daily newsletter, a list of the
top stories from the region. You can receive the list as a plain text or html email or
as a pdf file. Manage your delivery options here:
http://businessneweurope.eu/users/subs.php
CE TOP STORY
1. Latvia struggling to break Russian grip as it drops bid for gas utility
2. Spat over LNG terminal symptomatic of Baltic struggle to counter Russian
influence
3. Brussels gives first glimpse of what it means by "Energy Union"
4. Corruption scandal erupts in Lithuanian ruling coalition
5. Hungary plans internet levy in 2015
6. Latvian coalition saga takes a new twist
CE STORIES FROM WEBSITE
7. Kazakh central bank tries to calm devaluation fears
8. Kazakh government to offer 30% cash back to boost investments
9. Turkey's energy ties with Iraqi Kurds behind decision to allow passage for
Peshmerga
10. Ukraine crisis sparks renewed Russian interest in aging Trans-Mongolian Railway
CE RESEARCH AND COMMENT
11. EU government deficit falls in 2013, while state debt rises
12. Emerging Markets Briefer - It's not getting better
13. European transport infrastructure outlook remains stable on improved economic
prospects
14. Hungarian wage growth continues decline
15. Hungary reportedly mulling growth forecast downgrade
16. Poland drops deficit forecast
CE MACRO
17. Czech c.bank chief says external risks on the rise, mainly euro zone
18. Czech car production set to reach record, says industry chief
19. Hungary cuts offer of three-month T-bills on weak demand at primary auction
20. Industrial production in Lithuania increased by 6.9% MoM in September
21. Latvian PPI rises 0.1% MoM
22. Slovakia slashes 2013 deficit under new accounting rules
CE OTHER NEWS
23. Alior Bank eyes legal merger with Meritum in Q1'15, operating in Q4'15
24. Belarus increasingly attractive for Czech exporters
25. Czech MPs refuse to debate defence minister's role in TV series
26. East Capital acquires Metro Plaza office centre in Tallinn
27. Estonia Approves E-Residence to Lure Foreign Investments
28. Latvia mulls excluding Russians from residency scheme
29. Poland's PZU plans to expand asset management arm
30. Poland's Sikorski under fire over Russia interview
31. Polish hotel group Orbis receives offer to take over Accor network in Central
Europe
32. Polish opposition to euro rising
33. Polskie LNG to expand Swinoujscie terminal
34. SPI building pan-Baltic beverage group
35. Slovak MPs pass ban on water exports
36. Poland criticises eurozone banking union
CE TOP STORY
1. Latvia struggling to break Russian grip as it drops bid for gas utility
bne
October 21, 2014
Latvia has halted talks with E.ON over buying a 47% stake in national gas utility
Latvijas Gaze because the price is too high, the country’s prime minister said on
October 21. The move illustrates how Riga continues to struggle to gain any traction
in freeing its gas market from Russian control.
Latvia's government announced in September that it had submitted a non-binding
offer to the German company for the stake. However, confirming local press reports,
Prime Minister Laimdota Straujuma said in a television interview that the price for
the asset is too high and that Riga cannot afford the deal. "We cannot continue
talking about this process further," Straujuma said, according to Reuters. "The price
[asked by E.ON] is what we cannot offer."
Earlier this year, it was reported that E.ON was seeking as much as €220m for the
stake. Latvian media reported recently that Riga's offer - coming under pre-emption
rights - came to just €116m.
That was always unlikely to tempt E.ON, despite its drive to divest assets because of
EU pressure to unbundle or split ownership of suppliers and pipelines. Until recently,
it controlled the gas markets across the Baltic states alongside Russian giant
Gazprom. However, it has recently sold its stakes in both Estonia and Lithuania.
In Latvia, the German company is reported to have a bevy of suitors willing to join
Gazprom - which holds 34% in Latvijas Gaze - and Russian independent gas trader
Itera (16%).
Local media reported last month that several US companies are willing to stump up
€175m. Meanwhile, infrastructure investment fund Marguerite, owned by European
development banks, is also said to be interested.
Another reported suitor is oil trader Vitol, which owns 49.98% of Latvian oil terminal
operator Ventspils Nafta, reported Reuters. The company opened an office recently in
Riga, and said Latvia's capital will become its regional trade centre, the newswire
adds. Described as "a mystery even to many in the oil business”, it's unclear exactly
who is included in the Netherlands-based company's private ownership.
Falling behind
Closer to home, and offering the greatest potential for moving Latvia towards freeing
itself from 100% dependence on Russian gas supplies, are two Lithuanian stateowned companies - Lietuvos Energija and EPSO-G - which have also submitted nonbinding offers.
The pair were created earlier this year when Vilnius bought E.ON and Gazprom out of
Lithuania's gas utility company and pipeline operator. Those acquisitions followed a
long and bitter fight against the Russian gas supplier, and were the key step in
Lithuania's plan to launch a floating LNG platform by the end of this year. Vilnius
already secured a price cut on Russian gas thanks to the leverage it has gained.
Gas from the "Independence" platform is already being sold through Lithuania
pipelines. However, Vilnius wants to turn the facility into a regional hub. To sell gas
to Latvia, it must break the grip of Gazprom over the country's pipelines. At the
same time, Latvia hosts Incukalns - the only gas storage in the region - which is a
strategic asset for any gas trading in the Baltics.
However, with Incukalns also serving western Russia and the enclave of Kaliningrad,
Gazprom is unlikely to give up control without a fight, and Latvia is falling behind its
neighbours.
Estonia failed to buy E.ON out of Eesti Gas in the summer - Finland's Fortum, which
is partly owned by Gazprom, clinched the deal to raise its stake to 51.4%, with
Gazprom and Itera holding the rest - but Tallinn has demanded the country's
pipelines are unbundled by the end of the year.
Despite some political talk on unbundling, Riga has yet to take on Moscow. Latvia is
traditionally seen as the closest of the Baltics to Moscow, and hosts Gazprom's
regional HQ. However, with Estonia now pushing to follow in Lithuania's footsteps,
Latvia needs to act soon, independent energy consultant Andres Mae told bne.
"As the last of the Baltics to break Gazprom control of its networks, Latvia will be left
exposed to increased leverage and potential price hikes," he states. At the same
time, Riga has a tougher task, he adds. "Russia may not have fought too hard for
small markets like Lithuania, but Incukalns is a strategic asset."
2. Spat over LNG terminal symptomatic of Baltic struggle to counter Russian
influence
Tim Gosling in Prague
October 22, 2014
With Russia playing cat-and-mouse with Europe over gas deliveries, the need to
diversify energy supplies has never been greater. However, the deadlock over the
planned pan-Baltic liquefied natural gas (LNG) terminal demonstrates how difficult it
is to win broad international agreement, especially when the economics are uncertain
and Russia holds many of the aces.
Cut off from European gas networks because of their Soviet history, and thus fully
dependent on Russia for gas, the Baltics have long been earmarked for an EU-backed
LNG terminal.
Under the EU's first stress tests for the energy sector released this October, which
anticipate the potential impact of Russian gas supply disruptions, Finland and Estonia
were named as the most exposed, even though neither was affected by the RussiaUkraine gas wars that cut off several eastern EU states in 2006 and 2009.
However, disagreement over the location of the LNG terminal has prevented
progress towards this goal, forcing Estonia, Latvia and Lithuania to turn to Brussels
to make the decision in 2012. "Estonia or Finland" came the reply. That only opened
the door to more bickering between Tallinn and Helsinki.
Then in June, with concern over Russia's dominance of the region's gas markets
growing, the pair chanced their arm and proposed two terminals to the EU: Paldiski
in Estonia, to be built by Estonia's Alexela Energy; and Inkoo in Finland, to be built
by Finland's Gasum.
The Finnish project would depend on building Balticonnector, an 80km pipeline to
carry gas across the Gulf of Finland to Estonia. Gasum plans to build that link with
Estonian pipeline operator EG Vorguteenus.
Months after voicing its disapproval, the European Commission finally put its foot
down on September 30, publicly informing the project companies that it would not
raise funding to cover the extra cost. The same day, Gasum announced talks over
cooperation with Alexela had broken down.
Both the Finnish economy ministry and Alexela admitted that this will further delay a
pan-Baltic LNG plant. However, both the Estonian company and Gasum insist they
plan to continue with their individual projects. "We are planning to go on with our
project, but other solutions have to be found," Alexela Energia board member Marti
Haal told Baltic News Service.
Gasum's communications director Olga Vaisannen tells bne that the company will
"now go forward on [its] own. We've done a lot of work already."
Question of economics
The Finnish company aims to use the LNG not only to supply Finland and the Baltic
states, but also to supply the northern Nordic regions that pipelines do not reach.
Ironically, Gazprom is an indirect participant in both the Inkoo and Balticonnector
projects. It is a 25% shareholder in Gasum and it is also involved in Vorguteenus via
its shareholding in Eesti Gas, Estonia's dominant gas company. Other shareholders in
Eesti Gas include Finland's Fortum (partially owned by the Russian giant) and
Russian independent gas producer and trader Itera.
Estonia says it hopes that the regional terminal will be built, and sooner rather than
later. Thor-Sten Vertmann of the Estonian Ministry of Economic Affairs, tells bne:
"Our view remains unchanged: Estonia is interested in the most cost-effective, quick
and independent solution."
However, there are now serious questions over the economic viability of any project
to build one pan-Baltic LNG platform, let alone two. Annual demand in the three
Baltic states adds up to no more 5.5bn cubic metres (cm). Add Finland, and
consumption still only just passes the 9bn cm mark. Both Gasum's project and
Alexela's plan for a terminal across the water at Paldiski are working on capacity of
4bn-5bn cm.
"Estonia and Finland actually have little need of an LNG platform," says Andres Mae,
an independent Estonian energy analyst. He points out that with shale oil and wood
playing a large role in the pair's energy mix, gas consumption is relatively low.
Meanwhile, Finland has a favourable gas contract with Gazprom to 2025.
Moreover, Gazprom is in a position to limit Latvian and Estonian demand from any
LNG terminal, because of its ownership interest in both the country's pipeline and
distribution networks. Lithuania has forced the unbundling of the gas pipeline from
the distribution network, but Estonia and Latvia are still working on it.
Estonia has ordered the Vorguteenus pipeline operator sold by the end of the year,
and in June warned Eesti Gas shareholders - Gazprom, Finland's Fortum (partially
owned by the Russian giant) E.ON and Russian independent Itera - over their failure
to sell.
Latvia has spoken about unbundling, but is likely to face stiffer resistance from
Gazprom because the country contains the region's strategic storage facilities.
Floating a solution
Furthermore, having tired of waiting for a pan-Baltic platform to offer leverage
against Gazprom, Lithuania will launch its own floating LNG facility by the start of
2015.
The "Independence" will offer 3bn cm capacity, which will satisfy the country's full
demand, though it is unlikely to quit buying cheaper pipeline gas altogether.
Lithuania already won a 20% discount on its expiring contract with Gazprom, and is
using its new-found leverage in negotiations on a new deal covering 2016 onwards.
Surprisingly, analysts say they know of no comprehensive study into the potential
effect of the Lithuanian platform on the wider Baltic gas market. "It's still unclear if a
pan-Baltic LNG plant could be economically viable," Mae sums up. "We're yet to
understand the impact of the Lithuanian platform."
Gasum says the Lithuanian terminal makes EU aid even more essential. "The level of
EU support needs to be serious for the pan-Baltic LNG project to happen." says
Vaisannen.
Support from Brussels is "absolutely vital" for Inkoo - with both the Finnish and
Estonian LNG projects estimated at around €500m - the Gasum director adds, noting
that plans for the final location and financing could be in place as early as mid-2015.
Gasum has said previously it is in no rush, with the current EU funding round running
to 2019.
Gasum and Vorguteenus have also applied for EU funding on Balticonnector - which
is due to cost around €100m - and "should find out the response at the start of next
year," says Vaisannen.
In October, the European Commission did flag up the Baltic region as a priority in a
report on progress in building European gas and power networks. But these kind of
costs and the bitter competition between Finland and Estonia might eventually
persuade all sides to simply make do with the Lithuanian terminal.
"The prospect of EU funds is likely to push through a pan-Baltic LNG terminal
eventually," suggests Mae, "but not if Estonia and Finland continue to compete for
the location. In such a situation the Lithuanian terminal will work as an additional
supply channel for the three Baltics."
3. Brussels gives first glimpse of what it means by "Energy Union"
Energy Post
October 21, 2014
Career diplomat Maro_ Sefcovic from Slovakia gave the first glimpse of what the
EU's "Energy Union" may look like during his hearing at the European Parliament on
Monday night for the post of Europe's Vice President Energy Union.
Sefcovic believes in common purchasing of gas and the Southern Corridor (but
opposes South Stream), regards the internal market as the backbone of the Energy
Union, supports the UK's state aid to the nuclear power plant at Hinkley Point C,
wants to support biofuels and electric cars, and said "renewables are the key to
Europe's competitiveness".
To read the full story http://www.energypost.eu/brussels-gives-first-glimpse-meansenergy-union/
4. Corruption scandal erupts in Lithuanian ruling coalition
Xinhua
October 22, 2014
Allegations of corruption have shaken the members of the ruling coalition of
Lithuania with Special Investigation Service (SIS) officers searching the headquarters
of the Order and Justice Party on Tuesday.
SIS officers raided the headquarters of the Order and Justice Party and homes of five
persons, said the Service. Two of them have been working at the Ministry of Interior
of Lithuania, others are business owners, said SIS.
According to the prosecutors, the probe is connected with the public procurement at
the Ministry of Interior. Persons mentioned have been detained and being
questioned, said the Prosecutor's Office of Lithuania.
To read the full story
http://www.shanghaidaily.com/article/article_xinhua.aspx?id=248074
5. Hungary plans internet levy in 2015
Portfolio.hu
October 21, 2014
Hungary's Economy Minister Mihály Varga has on Tuesday submitted to Parliament a
draft on changes to the tax regime to be implemented in 2015. An amendment of
the telecom law is also included, according to which the telecom tax would be
extended to Internet services. The tax will be proportionate to data traffic and every
gigabyte started will cost 150 forints.
Varga has already told a press conference earlier today that the scope of the telecom
tax would be extended to Internet services. He argues that the original subject of the
levy, namely phone calls are made and text messages are sent mostly not traditional
tools, rather through the Internet.
To read the full story
http://www.portfolio.hu/en/economy/hungary_to_impose_internet_levy_in_2015_ta
x_plans_show.28561.html
6. Latvian coalition saga takes a new twist
LSM
October 21, 2014
Assumptions that a definitive coalition deal might be imminent, three weeks after
parliamentary elections on October 4 were looking premature Tuesday when the
Unity party of Prime Minister Laimdota Sraujuma said it would hold talks with
additional parties.
As talks between the three parties in the current ruling coalition seem to be stalled
with parties wrangling over how many ministerial portfolios each deserves,
Straujuma said she would also be turning to the newly-elected Regional Alliance and
Latvia From The Heart parties to sound them out about possible cooperation.
Speaking on LTV's morning news show Rita Panorama Tuesday, Straujuma said:
"Yes, we will be talking with the parties that got a smaller share of the votes to see
how we can cooperate in parliament." The next week would be taken up with drafting
a government declaration, with more dogfighting about ministerial posts next week,
Straujuma said.
To read the full story http://www.lsm.lv/en/article/politics/coalition-saga-takes-anew-twist.a103219/?utm_source=google
CE STORIES FROM WEBSITE
7. Kazakh central bank tries to calm devaluation fears
bne
October 22, 2014
Kairat Kelimbetov, head of Kazakhstan's central bank, has denied there are plans to
devalue the national currency amid the falling oil prices and Russian ruble. One of his
advisers suggested earlier that authorities would not dare to drop the value of the
tenge for the second time in a year for political reasons.
Kelimbetov told a news conference in Astana on October 21 that a 19% devaluation
in February had given the tenge a "very powerful" cushion. "In turn, I believe there
is no reason for concern. The cushion given [to the tenge] by the February
devaluation is very powerful," he said in remarks carried by Tengrinews.
To read the full story http://www.bne.eu/content/story/kazakh-central-bank-triescalm-devaluation-fears
8. Kazakh government to offer 30% cash back to boost investments
Marcus Booth and Henry Kirby in London
October 22, 2014
The government of Kazakhstan has confirmed plans to provide generous financial
incentives to foreign investors in newly-formed firms, while pledging to reduce state
involvement in the broader economy.
Cash-backs of up to 30% will be available for firms investing in entities less than a
year old in 14 core sectors - including mining/metallurgy, construction, agriculture
and pharmaceuticals - according to Kazakh officials speaking at an investment
conference in London.
"We aim to make Kazakhstan one of the top 30 investment destinations in the
world," said Yerlan Sagadiyev, deputy minister of investments and development.
"Our ministry's job is to deliver a package of measures that will take us there."
To read the full story http://www.bne.eu/content/story/kazakh-government-offer30-cash-back-boost-investments
9. Turkey's energy ties with Iraqi Kurds behind decision to allow passage
for Peshmerga
David O'Byrne in Istanbul
October 21, 2014
Turkey has performed a volte face and confirmed that it is allowing Kurdish
Peshmerga forces to pass through Turkey to help defend the northern Syrian town of
Kobane, under siege by militants of the Islamic State organisation (IS ). Those
Peshmerga forces are under the control of the Kurdistan Regional Government of
northern Iraq, with whom Turkey has been building crucial energy interests, thus
self-interest is likely behind the decision.
Turkish foreign ministry officials confirmed on October 20 that the movement of
Peshmerga forces from the Kurdistan Region of northern Iraq through Turkey to
Kobane has already begun, despite Turkish Foreign Minister Mevlut Cavusoglu stating
at a press conference earlier in the day that discussions were still ongoing.
Cavusoglu did not elaborate on who the talks were being held with - the Kurdistan
regional Government (KRG), the international coalition, or both - however the speed
with which an agreement appears to have been reached indicates that Turkey
realised that it needs both to take the threat posed to its own security by IS
seriously, and to be seen to be doing so by its allies.
To read the full story http://www.bne.eu/content/story/turkeys-energy-ties-iraqikurds-behind-decision-allow-passage-peshmerga
10. Ukraine crisis sparks renewed Russian interest in aging Trans-Mongolian
Railway
Terrence Edwards in Ulaanbaatar
October 22, 2014
The Trans-Mongolian Railway badly needs an overhaul if it is to operate as an
effective trade route between Russia and China. That could finally happen now both
of Mongolia's powerful neighbours have good reasons for doing so, which would have
the added effect of opening up more of Mongolia's vast mineral wealth to foreign
investors.
The Trans-Mongolian Railway is 1,800 kilometres of 1950s-era track bisecting the
landlocked country between China and Russia. It is slow and can only haul a little
over 20m tonnes of cargo across the country a year. The direct route across
Mongolia also fails to reach the valuable mineral deposits that are peppered
throughout the country.
Russia is a 50% partner with Mongolia of Ulaanbaatar Railways, which owns and
maintains the rail route. But Russia has shown little interest in the joint venture in
the years since it cut Mongolia loose when the Soviet Union broke apart. But now
Russia's disputes with the West have put Mongolia in an enviable position to facilitate
trade between Russia and China as well as step up its own trade in goods such as
meat products.
To read the full story http://www.bne.eu/content/story/ukraine-crisis-sparksrenewed-russian-interest-aging-trans-mongolian-railway
CE RESEARCH AND COMMENT
11. EU government deficit falls in 2013, while state debt rises
Eurostat
October 21, 2014
In 2013, the government deficit of both the euro area (EA18) and the EU28
decreased in absolute terms compared with 2012, while the government debt rose in
both zones. In the euro area the government deficit to GDP ratio decreased from
3.6% in 2012 to 2.9% in 2013 and in the EU28 from 4.2% to 3.2%. In the euro area
the government debt to GDP ratio increased from 89.0% at the end of 2012 to
90.9% at the end of 2013 and in the EU28 from 83.5% to 85.4%.
In 2013, government expenditure in the euro area was equivalent to 49.4% of GDP
and government revenue to 46.5%. The figures for the EU28 were 48.5% and 45.3%
respectively. In both zones, the government expenditure ratio decreased and the
government revenue ratio increased between 2012 and 2013.
12. Emerging Markets Briefer - It's not getting better
Danske Bank
October 21, 2014
Global markets are currently going through a pretty hard time. Risk-off sentiment
and ongoing nervousness in the global markets have triggered a strong sell-off in
risky assets. So, while the markets are getting somewhat desperate to see further
action from some of the major central banks, or perhaps looking for some kind of
comforting comments from the central bankers as the fear over the global economy's
health is building, commodity and oil prices have tumbled recently.
Even so, we do not tend to get carried away by imminent sell-offs and we focus
primarily on fundamentals while considering our FX forecast. However, at this point,
we expect the collapse in oil prices we saw last week to have a negative effect on
some of the oil exporting countries. This is clearly the case for Russia. Given the
current collapse in oil prices and low oil prices for longer, the Russian economy and
Russian rouble will continue to suffer, in our view. With the Russian economy set for
a bumpy ride in coming years, Russia's rating downgrade last week did not really
come as a big surprise. Moody's cut Russia's foreign currency long-term debt rating
to the second-lowest investment grade level and kept the negative outlook. This
means that the possibility of further downgrade is certainly high. Not only is Russia
struggling but also many of the LATAM countries and we expect them to continue to
struggle due to falling commodity prices. This is the case of Brazil but also Mexico.
Besides this, Brazil clearly faces political challenges as everything points to reelection of the incumbent President Dilma Rousseff, which is likely to mean a
continuation of contradictory policies and the lack of a reform agenda.
However, not all countries are suffering as a result of falling oil prices. Consumers in
countries such as South Africa and Turkey will clearly welcome falling oil prices.
Furthermore falling oil prices and low prices for longer is good news for the current
account deficits that both countries are struggling to narrow. This said, low oil prices
are simply not enough to spur weakening domestic demand and economies in
general. Both the South African and Turkish economies are likely to struggle to
maintain a sustained recovery.
Neither the Central nor Eastern European countries have escaped the global
headwinds. The lack of action by the ECB and ongoing economic slowdown in the
euro area are starting to hurt the CEE economies too. The CEE central banks
continue to down play the deflation pressures and the risk of more severe economic
slowdown but sooner rather than later the local central banks need to acknowledge
that low growth, low inflation and record-low interest rates are here for a long time.
13. European transport infrastructure outlook remains stable on improved
economic prospects
Moody's
October 21, 2014
The outlook for the European transport infrastructure industry will remain stable over
the next 12 to 18 months as improved business conditions are expected to lead to
growth in traffic volumes for European toll roads and airports, says Moody's
Investors Service.
Moody's report, entitled "2015 Outlook -- European Transport Infrastructure
Industry", is available on www.moodys.com. Moody's subscribers can access this
report via the link provided at the end of this press release.
"We expect EU airport passenger levels to grow by 2%-6% in 2014 and 1%-4% in
2015, mainly driven by an increase in airline capacity," says Joanna Fic, a Moody's
Vice President -- Senior Analyst and author of the report. "EU airports will benefit
from the increase in commercial revenues which are linked to traffic volumes, but
some may see pressure on rates due to regulatory reviews or competitive pricing."
EU airports will perform better than toll roads in 2015 due to their more diversified
traffic base and lower exposure to domestic economic conditions. The rating agency
anticipates toll road traffic growth of 0%-3% in 2014 and 0%-3% in 2015. The
increase in vehicle traffic will be a key driver of revenues as significant toll increases
are unlikely next year due to the low inflation rate. Contrary to the previous year,
Moody's does not expect a major difference in the performance of the peripheral EU
toll roads as compared with the core countries.
Moody's notes that the key risk to the stable outlook is the pace of GDP growth.
Slower economic growth or recession would likely negatively impact traffic volumes
at toll roads and airports, whereas a better than currently expected macroeconomic
environment could create credit pressure on the upside. While the main risk to the
euro area remains a prolonged period of low growth and low inflation, Moody's
believes that the Ukraine conflict is unlikely to have a significant impact on European
growth as trade and financial linkages with Ukraine and Russia are usually weak.
14. Hungarian wage growth continues decline
Commerzbank
October 22, 2014
Wage growth slowed further to 2.2%YoY in Aug from 3% in Jul (3rd month of
moderation), with the public sector driving the moderation (earlier in the year, the
govt's public work programmes had been the main job creation force, but this
segment is now witnessing falling wages). The deceleration was even sharper
excluding bonuses. The private sector is doing better, but still slower than the H1
average. The pace of retail sales is likely to cool down over coming months.
15. Hungary reportedly mulling growth forecast downgrade
Commerzbank
October 22, 2014
The media reports that the govt is considering sharply downgrading its 2015 growth
forecast: so far, official 2015 forecasts have been very upbeat; the CB forecasts
3.3% and PM Orban has hinted frequently at 4% being within reach. We, ourselves,
hold a rather modest 2.2% growth forecast for 2015, because of strong base effects
being generated this year by EU funds and the CB's lending schemes. Now, the
media reports that the cabinet may be looking to bring the official forecast down
towards 2.5%.
Of course, there could be political considerations behind a downgrade: e.g. Hungary
has promised NATO that the country will spend 2% of GDP on defence (vs. 0.7% at
present); and over-stating the GDP forecast would mean having to ramp up
expenditure commensurately. Nevertheless, we do not think that such reasons are
solely behind the downward revision.
Bottomline: A weaker forecast next year compared to this year makes sense to us,
although any slowdown is unlikely to be dramatic; the govt will likely introduce new
"one off" measures next year again (e.g. lending scheme for the construction
sector).
16. Poland drops deficit forecast
Commerzbank
October 22, 2014
The Finance Ministry gives latest guidance of 3.3% of GDP fiscal deficit this year
(down from previous forecast of 3.4% and down from 4% actual in 2013); the
central govt's deficit has narrowed impressively from 3.6% to 2.2% this year. Public
debt is down at 48.7% of GDP as a result of the OFE reform (debt was 55.7% in
end-2013). The general improvement in the fiscal situation has been widely known
for some time, but the deficit revision still counts as a positive.
CE MACRO
17. Czech c.bank chief says external risks on the rise, mainly euro zone
Reuters
October 22, 2014
External risks to the Czech economy, mainly the situation in the euro zone and also
the Russia-Ukraine conflict, have been on the rise in recent weeks, Czech central
bank Governor Miroslav Singer said on Tuesday.
The economy is on a path towards balanced and faster growth, but could be held
back by those external factors, he said in a presentation to students released on the
bank's website.
He said a recession in the euro zone would be a bigger risk than impacts of the
Russia-Ukraine conflict, unless the situation in the latter case deteriorates into
extreme scenarios. External risks were on the downside for both inflation and
growth, Singer said.
To read the full story http://in.reuters.com/article/2014/10/21/czech-cenbankidINA5N0QC01D20141021
18. Czech car production set to reach record, says industry chief
Radio Praha
October 22, 2014
Car production in the Czech Republic looks set to reach a record 1.2 million in 2014
the president of the country's Automotive Industry Association, Martin Jahn, said at a
regional gathering of carmakers on Tuesday. That would represent year on year
growth of over 6 percent and would be higher than the growth rate for Europe as a
whole. Parts makers in the Czech Republic should record an even bigger year-onyear increase in output, said Mr. Jahn. The current record for car production is 1.195
million, registered in 2011.
To read the full story http://www.radio.cz/en/section/news/czech-car-productionset-to-reach-record-12-million-this-year-says-industry-chief
19. Hungary cuts offer of three-month T-bills on weak demand at primary
auction
Intellinews
October 22, 2014
Hungary's state debt manager AKK sold HUF 20bn (EUR 65.3mn) of three-month
discount Treasury bills at an auction on October 21, placing only the half of the
amount initially offered, AKK informed.
Investors submitted bids worth HUF 32.3bn, down from HUF 51.8bn at the previous
auction held a week earlier, when AKK also sold the announced volume of HUF 40bn.
The latest auction was the first undersubscribed tender in four and a half years.
The average yield stood at 1.34%, rising 4bps from both the previous auction and
the secondary benchmark fixing. The range of yields widened and varied between
1.25% and 1.38%.
20. Industrial production in Lithuania increased by 6.9% MoM in September
Statistics Lithuania
October 21, 2014
Statistics Lithuania informs that in September 2014, industrial production totalled
LTL 5.8 billion (EUR 1.7 billion) at current prices and, compared to August, grew by
6.9% at constant prices, seasonally adjusted - by 1.7%.
In September 2014, against September 2013, industrial production increased by
1.5% at constant prices, working day adjusted - decreased by 0.5%. In JanuarySeptember 2014, industrial production totalled LTL 50.1 billion (EUR 14.5 billion) at
current prices; compared to the same period of 2013, it decreased by 1.4% at
constant prices, working day adjusted - 1.1%.
21. Latvian PPI rises 0.1% MoM
Central Statistical Bureau of Latvia
October 21, 2014
Compared to August, level of producer prices in Latvian industry in September 2014
rose by 0.1%, according to the data of Central Statistical Bureau of Latvia. Prices of
products sold on the domestic market rose by 0.2%, whereas of exported products remained the same. Over the month producer price changes were mostly affected by
price growth in electricity, steam and air conditioning supply.
In September 2014 compared to September of the previous year, the overall level of
producer prices in the Latvian industry increased by 0.3%. The producer prices of
products sold on the domestic market grew by 0.5%, whereas of exported products by 0.1%. The most significant price rise was observed in the manufacture of wood
and wood products, except furniture (by 0.5 percentage points), but the largest
decreasing impact had reduction of prices in manufacture of food products (by 0.3
percentage points) and in manufacture of computer, electronic and optical products
(by 0.2 percentage points).
22. Slovakia slashes 2013 deficit under new accounting rules
bne
October 21, 2014
Slovakia's general government deficit in 2013 has been revised down to an
estimated of EUR 1.93bn, or 2.63% of GDP, following the switch to the new
European System of Accounts (ESA) 2010 methodology from the ESA 95 standard,
the statistics office said in its semi-annual report to the European Commission,
reports Intellinews.
In the report submitted in April, the statistics office estimated the deficit at EUR
1.99bn, equalling to 2.77% of the GDP. For 2104, the budget gap is seen at EUR
2.19bn, or 2.93% of economic output.
Under the new methodology, the Slovak general government debt amounted to EUR
40.18bn, accounting for 54.6% of the GDP at the end of last year, the statistics
office said revising the figure from EUR 39.98bn, or 55.42% of GDP, reported in
April. For 2014, the debt is seen totalling EUR 41.27bn, equalling to 54.94% of the
GDP.
After aligning the data to ESA 2010, Slovakia's 2013 GDP was revised up to EUR
73.59bn from previous EUR 72.13bn. In 2014, the GDP is seen reaching EUR
75.12bn.
Slovakia's 2015 budget sees the deficit at 1.98% of GDP, below the EU's limit of 3%.
The shortfall is aimed to be cut further to 1.43% of GDP in 2016 and to 0.39% of
GDP in 2017.
CE OTHER NEWS
23. Alior Bank eyes legal merger with Meritum in Q1'15, operating in Q4'15
PAP
October 21, 2014
Alior Bank, the WSE-listed unit of Italian Carlo Tassara, expects to conduct the legal
merger with Meritum Bank
"After securing the necessary consents, in the optimistic option the legal merger
could take place in Q1," Sobieraj said. "The operating merger may take half year. So
in the optimistic scenario the operating merger could be completed in Q4 2015."
"While the transaction will not satiate our appetite for acquisitions, but we are aware
of our limitations tied to ownership and capital issues."
Alior sees PLN 36 mln in synergies in 2015, PLN 77 mln in 2016 and PLN 85 mln in
2017, the bank said in a presentation earlier Tuesday. The cost synergies alone
should amount to PLN 25 mln in 2015, and PLN 49 mln in both 2016 and 2014 each.
To read the full story http://biznes.pap.pl/en/news/pap/info/1154546,alior-bankeyes-legal-merger-with-meritum-in-q1-15--operating-in-q4-15
24. Belarus increasingly attractive for Czech exporters
Radio Praha
October 22, 2014
Trade between the Czech Republic and Belarus has been steadily growing over the
past decade, with Czech exports to that country having risen by more 250 percent
over the last five years. Belarus has also become an important destination for Czech
investors, and its significance is set to rise in light of the Ukrainian crisis.
To read the full story http://www.radio.cz/en/section/business/belarus-increasinglyattractive-for-czech-exporters
25. Czech MPs refuse to debate defence minister's role in TV series
CTK
October 21, 2014
The Czech opposition Civic Democrats (ODS) today failed to push through their
demand that the Chamber of Deputies discuss Defence Minister Martin Stropnicky´s
(ANO) participation as an actor in a sequel of a TV crime series, in which he allegedly
cast unfavourable light on the Czech military.
ODS deputy Jana Cernochova said Stropnicky harmed the military by presenting
soldiers as murderers and drug dealers, and he should apologise to soldiers.
Stropnicky, who is an actor by profession, said he does not think he should apologise
for his TV role of a police investigator.
To read the full story http://www.ceskenoviny.cz/news/zpravy/czech-mps-refuse-todebate-defence-minister-s-acting-in-tvseries/1137883?utm_source=rss&utm_medium=feed
26. East Capital acquires Metro Plaza office centre in Tallinn
Press release
October 21, 2014
East Capital Baltic Property Fund II ("the Fund"), managed by East Capital, has
yesterday acquired the Metro Plaza office building in Tallinn, Estonia. The property,
located in the central business district (CBD) of Tallinn, was previously owned by
Lords LB Baltic Fund I. The purchase price was €21,8 million, implying a yield rate of
7%.
"Our acquisition of Metro Plaza is another investment that illustrates the
attractiveness of the Baltic real estate sector. The combination of a high yield level
and favourable financing terms creates attractive investment opportunities in this
market", said Kestutis Sasnauskas, Head of East Capital Private Equity and Real
Estate.
The Metro Plaza centre is in Tallinn's old town based in a modern building that
reflects the vibrant business growth of Estonia's capital. The centre is close to the
harbour and is in walking distance of nearby Toompea hill, home to Estonia's
Parliament building and several foreign embassies.
"Through this transaction, East Capital Baltic Property Fund II acquired a well-known
A-class office building in CBD Tallinn. With this purchase, East Capital's total real
estate assets under management increase to €284 million, 250,000 square metres
and 500 lessees in all three Baltic countries. This reconfirms East Capital's position
as one of the leading participants in the Baltic real estate market", said
Madis Raidma, Real Estate CEO at East Capital.
East Capital Baltic Property Fund II was founded in 2012 and invests in commercial
real estate in the Baltics. Today the Fund has investments in and around all three
Baltic capitals, namely Tallinn, Riga and Vilnius. The Fund's focus is on properties in
prime locations with well-established tenants and sustainable rental terms.
27. Estonia Approves E-Residence to Lure Foreign Investments
Bloomberg
October 21, 2014
Estonia will issue identity cards allowing access to its digital services to people
residing outside the Baltic nation as it seeks to boost foreign investment.
Lawmakers in the capital Tallinn voted unanimously with no abstentions to let
foreigners seek e-residence status to be able to set up a company in Estonia or sign
legal documents from anywhere in the world, according to a live broadcast. The law
goes into effect on Dec. 1.
To read the full story http://www.businessweek.com/news/2014-10-21/estoniaapproves-e-residence-to-lure-foreign-investments
28. Latvia mulls excluding Russians from residency scheme
The Moscow Times
October 22, 2014
A Latvian parliamentary committee has voted to temporarily exclude Russian citizens
from a program that hands out residency permits in exchange for investment,
Russian news website Gazeta.ru reported Tuesday.
The Latvian committee, which is responsible for defense, internal affairs and anticorruption activities, cited Russia's hand in the Ukraine crisis as the primary reason
for its recommendation. Latvia's cabinet must approve the ban for it to be enacted.
Unlike more stringent programs in Britain and Cyprus, Latvia's program is renowned
as an accessible and cheap way of achieving visa-free travel throughout the
European Union. Begun in 2011, the program requires that foreigners invest 250,000
euros ($320,000) in Latvia, which may take the form of a real-estate purchase.
To read the full story http://www.themoscowtimes.com/business/article/latviaconsiders-excluding-russians-from-residency-program-over-ukraine/509843.html
29. Poland's PZU plans to expand asset management arm
Reuters
October 22, 2014
PZU, eastern Europe's largest insurer, wants to develop its asset management
business by investing in new areas as well as expand its existing investments in real
estate and corporate debt, PZU chairman Andrzej Klesyk said.
PZU is already Poland's largest insurer and has just bought British insurer RSA's
eastern European operations. The aim now is to focus on improving its returns via its
asset management arm.
"Currently the contribution to our net profit from asset management is less than 1
percent. I wish that it was many times more," Klesyk said in an interview. "We can
flex our muscles, make a big effort, but compared to, for instance, London firms we
are small when it comes to asset management," he said.
To read the full story http://www.dailymail.co.uk/wires/reuters/article2801794/Polands-PZU-plans-expand-asset-management-arm.html
30. Poland's Sikorski under fire over Russia interview
AP
October 22, 2014
Poland's former Foreign Minister Radek Sikorski came under fire Tuesday from the
prime minister and political opponents over a U.S. magazine interview in which he
allegedly said Russia's president offered Poland the opportunity to jointly carve up
Ukraine in 2008.
Sikorski, now the parliamentary speaker, was quoted as saying in Sunday's issue of
Politico Magazine that Russian President Vladimir Putin "wanted us to become
participants in this partition of Ukraine." He said Putin made the offer to then Polish
Prime Minister Donald Tusk in Moscow in 2008.
Prime Minister Ewa Kopacz, who's in the same party as Sikorski, criticized him for
dodging reporters' questions on the issue. "I will not tolerate this kind of standards
that Speaker Sikorski tried to present at today's (news) conference," Kopacz said.
To read the full story http://news.yahoo.com/polands-sikorski-under-fire-overrussia-interview-145629159.html
31. Polish hotel group Orbis receives offer to take over Accor network in
Central Europe
Press release
October 21, 2014
Orbis S.A., the largest hotel group in Poland, received from its strategic partner
Accor, the offer of taking over network of 46 hotels in Central Europe - based on a
new Master License Agreement for the whole region. As per the potential transaction
Orbis would be the sole licensor of Accor brands in the region. A total price expected
by Accor in the offer amounts to 142.3 million euros.
The offer comprises taking over Accor subsidiaries in the following countries:
Hungary (that also encompasses Accor operations in Macedonia, Slovakia and
Bulgaria), Czech Republic, Romania and Poland (Muranowska Sp. z o.o. and Hotek
Polska Sp. z o.o.). The 46 hotel portfolio includes: 11 owned (1,974 rooms), 17
leased (3,573 rooms), 11 managed (1,685 rooms) and 7 franchised (821 rooms). All
hotels operate under the Accor brands: Sofitel, Pullman, MGallery, Novotel, Mercure,
ibis and ibis budget. 76% of the existing hotels is located in capital cities. The
subsidiaries in Poland include two hotels that Orbis has already been operating on a
management contract basis i.e. ibis Warsaw Old Town and Sofitel Wroclaw Old Town.
Most of the hotels are operational, while 8 projects are in pipeline of which 3 hotels
will be managed and 5 will be subject to franchise agreements. The offer comprises
also an exclusivity of negotiations for Orbis till the end of November 2014.
"We have been analysing the possibilities of development through acquisitions for
some time now. Additionally, it is worth noting that Orbis is well represented in many
key cities in Poland and a business segment of our operations is to a great extent
saturated. Therefore the proposal of acquiring hotel operations from Accor in those
countries is in line with our strategy. It would give a chance for a more dynamic
growth of the Orbis Group. Many of these hotels are located in very attractive places
such as Budapest or Prague." - said Gilles Clavie, President of the Management
Board of Orbis.
Orbis strategy assumes strengthening of the leading position in the region through
further development and efficiency increase of its hotels. Therefore the Group
focuses on expansion through management, franchise and investments in own
hotels. Currently, the Orbis Group comprises 68 hotels (including 52 owned, 1
leased, 3 hotels under management agreements and 12 franchised) operating in 32
cities and resorts in Poland, Lithuania and Latvia.
"We have already gained the experience in acquiring the Hekon hotels from Accor in
2003, which was a real success. We are also licenced to operate hotels under the
Accor brands in Poland, Lithuania, Latvia and Estonia. If we took over hotels in 6
other countries we would record a significant business increase - the total number of
our hotels would exceed 110 and Orbis would strengthen its position as the biggest
hotel group in Central Europe." - said Ireneusz W_g_owski, Vice President of the
Management Board of Orbis.
The analysts if the offer, including valuation of assets by independent consultants, as
well as discussions with Accor will be carried out in the coming weeks. The the
management board will submit a motion on acceptance or rejection of the offer of
the Orbia supervisory board for approval.
32. Polish opposition to euro rising
Intellinews
October 22, 2014
The percentage of Poles who are against the country's taking on the euro inched up
by 1pp m/m to 76% in September, according to pollster GfK Polonia.
A total of 38% of the polled said that they are firmly against the euro-zone entry and
another 38% of them said they were "rather opposed."
The percentage of euro adoption's advocates is 18% (down by 3pps m/m), while 6%
of the polled chose the "don't know" answer.
When Poland joined the European Union in 2004, it obliged itself to take on the euro,
but with no time restraints.
In early October, new PM Ewa Kopacz said in her policy speech that the criteria that
define the timing for Poland's adoption of the euro most precisely are the
strengthened euro zone after it emerges from its crisis and stable economy in
Poland. She stressed that the euro zone has just experienced its worst-ever crisis
and the Polish government would like to see it strengthened after this experience.
Kopacz added that both the euro zone and Poland have "homework to do" in the next
few years.
33. Polskie LNG to expand Swinoujscie terminal
LNG Industry
October 21, 2014
Polskie LNG and Polish Oil and Gas Company have signed a Letter of Intent, in which
they declare joint action regarding the expansion and development of additional
services at the Swinoujscie LNG terminal.
The purpose of the LOI is to provide a basis for further discussions and negotiations
in order to establish rules for cooperation in such areas as the expansion of the LNG
terminal in Swinoujscie with a third tank, the development of additional LNG cargo
handling units and the bunkering of LNG fuelled vessels.
These actions will increase the energy security of Poland and, more directly, the
surrounding region, Polskie LNG said in a statement.
To read the full story http://www.lngindustry.com/news/liquid-naturalgas/articles/Swinoujscie-LNG-terminal-set-for-expansion-1636.aspx#.VEaB8GS1ZTF
34. SPI building pan-Baltic beverage group
The Spirits Business
October 21, 2014
The creation of Amber Beverage Group will see producer JSC Latvijas Balzams, SPI
Distribution Latvia, SPI Distribution Estonia, Bennet Distributors in Lithuania,
beverage retailer Latvijas Balzams in Latvia and Bravo Alco in Lithuania combine
under one umbrella. A new logistics company will also join Amber Beverage Group
later this month.
Altogether, Amber Beverage will employ 1,300 employees across Latvia, Lithuania
and Estonia who bottle, market, distribute, export and retail around 500 spirits and
wines to 160 global markets. Each business unit will retain its name and
management following the merger.
To read the full story http://www.thespiritsbusiness.com/2014/10/stoli-ownercreates-baltics-beverage-group/
35. Slovak MPs pass ban on water exports
Slovak Spectator
October 21, 2014
The Slovak parliament passed the constitutional ban on exporting water at its
October 21 session. The change was supported by 102 MPs together, the TASR
newswire reported.
The fourth article of the constitution which pertains to raw natural resources will now
contain a new paragraph reading that "the transport of water taken from water
formations situated on Slovakia's territory across the borders through means of
transport or pipelines is banned; the ban does not apply to water for personal
consumption, bottled drinking water and bottled mineral water in Slovakia and
provision of humanitarian aid and aid in an emergency situation", as reported by
TASR.
The current version of the amendment is a result of the compromise agreement
between ruling Smer and the opposition, the SITA newswire wrote.
To read the full story
http://spectator.sme.sk/articles/view/55645/10/mps_pass_ban_on_water_exports.h
tml
36. Poland criticises eurozone banking union
Erste
October 22, 2014
Poland’s central bank governor has criticised the eurozone’s new banking union,
saying it would centralise powers to curb booms and busts that are better left to
individual member states.
Marek Belka said Poland was in no rush to join the euro area scheme, arguing that
regulators in Warsaw had a strong record and that there was no need for them to be
replaced by counterparts in Frankfurt.
Mr Belka said he was concerned about the influence the SSM could gain over socalled macroprudential regulation, which aims to prevent system-wide fragilities from
emerging in the financial sector. He argued that this aspect of policy should be left in
the hands of national regulators, given excesses were likely to develop in single
countries rather than across the entire union.
To read the full story http://www.ft.com/intl/cms/s/0/ba6537d2-5905-11e4-a72200144feab7de.html#axzz3Gm20cakd