Summary of economic news released on Tuesday, July 25
Over Twelve Pct. of Eligible Clients Switched a Pension Fund Company
Social security provider Socialna Poistovna recorded already 124,200 contracts on client's transfer to another pension management company since the beginning of this year, said its spokeswoman Vladimira Pobisova on Tuesday. Around 1 million savers had the option to move into another pension fund management company as of January. The outgoing clients represent 12.4 percent of the total of savers registered with Socialna Poistovna as of July 24 of last year. As of the beginning of August, the law enables a client to change the pension saving company after two years at the soonest since enrollment of the first pension saving contract in the Socialna Poistovna register.
CPS Insurer with H1 Written Premiums at SKK 1.858 Bln.
Insurance company Ceska Poistovna-Slovensko, a.s, (CPS) managed to increase its pretax profit by over 60 percent y/y to be at SKK 13.2 million at the end of June. The insurer reported an SKK 15.1 million loss over the first quarter of this year. The company representatives told SITA that CPS expects to close this year in positive territory. CPS reported written premiums of SKK 1.858 billion in the first half of this year, which is an increase of 8.4 percent compared with the same period of last year.
Central Bank Raises Key Interest Rates in July
The National Bank of Slovakia (NBS) increases two-week sterilization repo rate by fifty basis points and one-day refinancing repo rate by a hundred basis points as of Wednesday, July 26. Based on the Tuesday's decision of the NBS Bank Board, the two-week sterilization repo rate will increase from present 4.0 percent p.a. to 4.5 percent p.a., while the one-day refinancing repo rate will grow from 5.0 percent p.a. to 6.0 percent p.a. The one-day sterilization rate will remain unchanged at 3.0 percent p.a., NBS spokesman Igor Barat informed SITA news agency.
Tatra Banka to Float EUR 100 Mln. Mortgage-Backed Bond
Tatra Banka, the third largest bank in Slovakia, is preparing to float the fifteenth issue of mortgage-backed bonds amounting to EUR 100 million. The bank plans to launch the issue on August 2 to finance mortgages. The par value of bonds will be EUR 1 million and they will bear a flexible coupon equaling three-month EURIBOR plus 0.16 percent p.a. Interest will be paid quarterly. The mortgage-backed bonds will mature on August 2, 2007, according to data published by Tatra Banka.
Slovakia has Emergency Crude Oil Reserves for 74 Days
As of June 30, the State Material Reserves Administration (SSHR) bought 70,000 tons of crude oil and thus increased the country's reserves to 74-days average consumption. This information comes from a report on commodities of state material reserves for the first six months of the year, which will be on the agenda of the cabinet session on Wednesday. This year total emergency supplies of crude oil and crude-oil products should reach 508,800 tons, representing average consumption for 73 days. One year later they should increase to 577,139 tons, which means 82 days of average country's consumption. According to EU requirements Slovakia must maintain reserves of crude oil and crude oil products in 2008 lasting for ninety days, which is 640,526 tons of crude oil and crude-oil products.
Monopolies, Petrol Prices and Euro-Funds High on Cabinet's Agenda
The new Slovak cabinet headed by Robert Fico intends to focus its third regular meeting this Wednesday on energy security, motor fuel prices, and the plan for drawing Euro-funds in the next programming period. Following Mr. Fico's statement last week who accused the previous government of Mikulas Dzurinda of having threatened the country's energy security by selling of strategic monopolies to foreign companies, the Economy Ministry is scheduled to submit a draft plan of immediate mid-term steps towards monopolies.
Government's Program Will Not Include Capitalization Pillar Cuts
According to the Association of Pension Fund Management Companies, the Minister of Labor, Social Affairs, and Family, Viera Tomanova has assured that reduction of contributions into the capitalization pillar of old-age pension saving would be not part of the government's program for its four-year term. This assurance is welcome news for pension fund management companies (DSS), the president of the DSS Association Zuzana Adamova said at a press conference on Tuesday. She added that representatives of the pension fund management companies received such assurance during a meeting with the minister.
Central Bank May Further Tighten its Monetary Policy
The National Bank of Slovakia (NBS) will probably have to continue tightening its monetary policy in the upcoming months, NBS Vice-Governor Martin Barto told journalists during a break of the NBS Bank Board meeting on Tuesday. "We cannot rule out further increase of key interest rates by the end of this year," he said. The NBS Bank Board decided on Tuesday to increase the one-day refinancing repo rate by one percentage point to 6 percent p.a., the two-week sterilization repo rate by 0.5 percentage point to 4.5 percent p.a., while it left the one-day sterilization repo rate unchanged at 3 percent p.a. Seven of eight appointed members of the NBS Bank Board voted to change key interest rates, while no one was against.
PAS Survey Shows Minor Q2 Business Environment Improvement
The Business Alliance of Slovakia (PAS) says that the business environment here has just slightly improved over the second quarter of this year. The business environment index that PAS calculates from results of its own survey reached 126.51 points representing a moderate rise of 0.87 percent from the previous quarter, PAS coordinator Daniel Koenig told SITA.
Slovak Ministers in Russia Discuss Expanding Gas Transport Capacity
Slovak Economy Minister Lubomir Jahnatek and Foreign Affairs Minister Jan Kubis discussed in Moscow on Tuesday with the head of the Cabinet Office and Minister of the Russian Federation Sergei Naryshkin about possibilities to widen transport capacities of crude oil and natural gas, their current use, and potential connection to other transition systems in Europe. "Participants of the negotiations evaluated questions of long-term supplies of natural gas and crude oil, nuclear fuel and a whole complex of aspects linked with energy security of Slovakia but also other partners from the European Union," said Slovak Economy Ministry's spokesman Branislav Zvara. Construction of natural gas reservoirs was debated during the meeting as well.
INVESTING: Assets in Pension Funds Exceeded SKK 18 Bln. Last Week
The net value of policyholders' assets in licensed pension fund management companies in Slovakia (DSS) represented SKK 18.11 billion as of July 21. The value of assets in pension funds managed by six DSS companies increased by SKK 469.4 million week-on-week. Almost SKK 11.83 billion was in growth funds, SKK 5.52 billion in balanced funds and SKK 765.1 million in conservative funds as of Friday, July 21.
Shoemaker Supplier Euroobuv with SKK 154.9 Mln. Sales in 2005
Euroobuv, s.r.o. Komarno that manufactures shoe tops reported sales of its products and services at SKK 154.9 million for last year. However, it is a drop of 10.7 percent from the previous year. Company's production costs fell by 23.8 percent to SKK 42.5 million, informed Kristina Gendiarova from Rieker Obuv, the parent company of Euroobuv. The company earned a taxed profit of SKK 2.1 million last year, representing a considerable improvement from 2004 when the company netted SKK 670,000.
Central Bank Says Economy is Beginning to Moderately Overheat
The central bank said that the Slovak economy is beginning to move beyond its current capacity. According to the central bank's up to date mid-term prediction of macroeconomic development, the production gap should represent this year 0.2 percent of country's gross domestic product (GDP). Head of the National Bank of Slovakia (BS) monetary policy department, Peter Sevcovic underscored that the economy is beginning to moderately overheat and also taking into consideration the previous development, monetary conditions are momentarily more relaxed compared wit the central bank's expectations. However, also due to the direction of NBS restrictive monetary policy, a negative production margin should open.
MONEY MARKET: Market Anticipated Key Interest Rate Rise
The interbank market focused its attention on the National Bank of Slovakia Bank Board session on Tuesday, which decided on a fifty basis points increase in two-week repo tender rate to 4.5 percent p.a. One-day refinancing repo rate rose by 100 basis points to 6.0 percent p.a. On the other hand one-day sterilization rate remained unchanged at 3.0 percent p.a. "The effort of the NBS to demotivate short-term speculative funds from active operation on the FOREX market may be behind this adjustment of repo rates," Slovenska Sporitelna dealer Pavel Janosik explained. The NBS decision on Tuesday didn't influence the yield curve, as the interbank market counted with a 50-basis point rise in repo rates, added the dealer.
Current Account Deficit was SKK 38.2 Bln. in Late April
Preliminary data for April of this year show Slovakia's current account of the balance of payments ended the first four months with an SKK 38.174 billion deficit. The capital and financial account of the balance of payments reported a four-month surplus of SKK 44.617 million, while the National Bank of Slovakia (NBS) registered a surplus of SKK 19.658 billion within other non-assigned items. The balance of payments thus ended the first four months of this year with a surplus of SKK 26.101 billion, the NBS informed SITA.
Bankrupt ZTS TEES Martinske Strojarne Offers its Assets for Sale
The receiver in bankrupt engineering company ZTS TEES Martinske Strojarne, a.s. is offering for sale the company's immovable and movable assets in the first and the third round. "Within the first round, real estate in Martin and Trstena is offered for sale. Other real estate in Martin and Valca is for sale within the third round," Miloslav Holec from the assets administration department told SITA. Out of movable assets the receiver offers for sale assets, which are characterized as fixed assets. "If offers for sale of assets are not successful, their price will be reduced," added Mr. Holec. According to Mr. Holec, potential buyers can collect information dossiers on sale terms after settling an SKK 3,000 fee. They have until August 25, 2006 to send their bids to the receiver.
Slovenska Sporitelna Earned H1 Pre-tax Profit of SKK 2.125 Bln.
The largest bank in Slovakia, Slovenska Sporitelna, a.s. Bratislava (SLSP), reported an H1 pre tax profit of SKK 2.125 billion according to international accounting standards, while taxed profit represented SKK 1.825 billion. Net interest income amounted to SKK 3.820 billion and net income from fees and commissions reached SKK 1.469 billion in the monitored period, reads information released by the Bratislava Stock Exchange (BCPB).
FOREX MARKET: Crown's Exchange Rate Strengthens on Tuesday
The exchange rate of the Slovak crown against its referential currency the euro only moved moderately in the morning and the crown strengthened more significantly after the central bank announced its decision to raise key interest rates. Tatra Banka dealer Roman Farkas stated that the local currency opened at 38.200/38.230 SKK/EUR and the exchange rate was moving around that level in the morning. "The crown started to weaken moderately at noon, after the National Bank of Slovakia announced its decision to raise key interest rates by fifty basis points. The market namely counted with a seventy basis point rise," explained the dealer. However, crown's response was only brief and later on London banks started trading large volumes, moving crown's exchange rate to SKK 37.945 SKK/EUR. The crown stood at 38.040/38.070 SKK/EUR at the end of trading.
INVESTING: Money Continued to Flow Out from Mutual Funds Last Week
Outflow of money from open-end mutual funds managed by members of the Slovak Asset Management Companies Association (SASS) continued. Investors last week withdrew SKK 639.4 million on aggregate, informed the SASS. Bond funds again reported the biggest outflow of money, representing SKK 403.1 million. The value of returned items exceeded the sum of sold items by SKK 157.4 million. Mixed funds posted negative net sales of SKK 114 million and master funds registered SKK 102.4 million negative net sales. On the other hand net sales equity funds totaled SKK 100.8 million.
STOCK MARKET: No Trading on BCPB on Tuesday
There was no trading on the Bratislava Stock Exchange (BCPB) on Tuesday due to technical problems. Therefore, the Bratislava Stock Exchange canceled the trading day July 25, 2006 in line with its trading rules, Silvia Rumanova of the BCPB international relations and marketing department told SITA.
Slovakia's Gross Foreign Debt at USD 28.891 Bln. in April 2006
Slovakia's gross foreign debt totaled USD 28.891 billion at the end of April 2006. Compared to March 2006 foreign debt increased USD 365.7 million. According to the National Bank of Slovakia (NBS) the total gross foreign debt per capita was USD 5,371 at the end of April.
Central Bank Sold EUR 1.335 Bln. in Direct Interventions in June
The National Bank of Slovakia (NBS) twice intervened to support the local currency in June. During that month the central bank sold EUR 1.335 billion in the form of direct interventions, informed the NBS on Tuesday, July 25.
Russneft still Wants a Stake in Slovak Company Transpetrol from Yukos
Russian oil company Russneft is still interested in a 49-percent stake in Slovak crude oil pipeline company Transpetrol currently in the hands of ailing Russian crude oil giant Yukos. Russneft CEO Michail Guceriev met in Moscow on Tuesday with Slovak Economy Minister Lubomir Jahnatek and Foreign Minister Jan Kubis.