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. Last Updated: 07/27/2016

Bull Run Extends to Most of East Europe

BUCHAREST, Romania -- Moscow was not the only emerging market soaring this week.


A strong bull run brought a flying start for most East European stocks in the first week of trading this year, with Warsaw hitting record highs and prices soaring in Prague and Ljubliana.


Budapest's bullish trend was capped down by profit-taking Friday, with Warsaw expecting a similar move next week.


Bratislava shifted to higher gear, and shares in Zagreb and Bucharest were on the rise. Tirana had no trades and Bulgaria stock trading remained suspended.


In Warsaw, the surge in Polish shares set three consecutive 33-month highs, but analysts were not sure whether the rally would continue next week.


They said profit-taking was likely early next week, but were unsure whether the market, buoyed by foreign buying, would hit new records or fall later in the week.


The WIG index soared 6.4 percent this week to 15,418.9 points.


"I don't think the trend will last on the long term. It's too violent and seems to be purely psychological, not based on fundamentals. It's difficult to say when it will end," said Pawel Tarnowski of Raiffeisen Capital and Investment Polska.


Analysts said investors would be watching December and 1996 inflation data due Wednesday, as the central bank said a possible decision to raise rates might hinge on those figures.


The Budapest Stock Exchange began the year in an euphoric mood with the BUX index steadily climbing from last December's rally despite Friday's 10.09 drop amid profit-taking.


The BUX hit the 14th successive record high in a row Thursday, closing at 4,724.59 points, up 161.76. The BUX has more than tripled since the beginning of 1996 and rose 14 percent from Dec. 31.


Traders said the bull run was driven by fresh interest of foreign and domestic investors on a worldwide rising trend on stock markets. Good Hungarian macroeconomic figures and corporate results also underpinned investors sentiment that Hungarian shares were undervalued.


The pace of the rally took traders by surprise. Even though a downward correction may come any time, they said Hungarian stocks were likely to extend their gains substantially in 1997.


In Prague, Czech shares took off with gains this year and analysts say foreign investors may be diverting their attention to the relatively undervalued PX50 after realizing strong gains last year in Warsaw and Budapest.


"We cannot expect the same strong interest in Poland and Hungary so the investors have decided to put money into the Czech Republic," said Miroslav Nosal of Patria Finance.


Last year the PX50 index rose by just 27 percent compared with well over 100 percent in Budapest and nearly 90 percent in Warsaw. In the week to Friday, the PX50 rose 3.4 percent to 557.8 powered by strong performances from major issues.