The main stock markets of Central and Southeast Europe jumped in mid-November on a series of positive news reports of vaccine trial successes that gave hope that an end to the disruption caused by the coronavirus (COVID-19) could arrive within months. 

The performance of the main indexes of exchanges in Warsaw, Prague, Budapest, Bucharest and elsewhere reflected the global pattern, as the main international indexes also rose to highs not seen for several months. Among them, the Dow Jones soared to pre-pandemic levels, while the FTSE-100 reached its highest level since June. 

The first boost came in the second week of November, when early results from US pharma giant Pfizer’s phase three trials of its vaccine showed it was over 90% effective against the virus. This news broke shortly after Democratic candidate Joe Biden was declared the winner of the US presidential election; stocks had already started surging during the count as it became increasingly clear that the US was heading for a Biden presidency. 

It was followed swiftly by news from Moderna on its COVID-19 drug, which trials showed to be 94.5% effective, causing markets to shoot up again, wth aviation stocks in particular rallying.

From COVID companies to hospitality and retail in Warsaw

The main indices for the larger and more liquid stock exchanges in the Central and Southeast European region reflected the global trend. 

The wave of optimism sparked by the vaccine news led to an improvement of the mood on the region’s largest bourse, the Warsaw Stock Exchange. The main index, WIG, has risen 12.41% in the past four weeks, despite the rapid spread of the virus in Poland recently that led the government to tighten restrictions and urge Poles to skip Christmas travel. 

^{The Warsaw Stock Exchange's main index, WIG, has risen 12.41% in the past four weeks.} 

Analysts also noted that the vaccine news led to investors buying the stocks of companies that had suffered because of lockdown and subsequent varying forms of COVID-19 restrictions, such as restaurant operator AmRest, shoe retailer CCC, clothes retailer LPP or travel agent Rainbow. 

On the other hand, investors started selling stocks of companies that did well in the pandemic circumstances, such as the online retailer Allegro, gaming giant CD Projekt and maker of medical protective gloves and masks Mercator, one of the so-called COVID companies that rallied during the pandemic. 

Prague’s PX strengthens 

The Prague Stock Exchange’s PX index strengthened on November 10, closing above 900 points for the first time in two months, up by 1.23% to 904.38 points.

^{Prague Stock Exchange’s PX index has strengthened since November 10.} 

This was mainly driven by banking stocks; Komercni Banka and Erste Bank rose by more than 4% and 3% respectively. As in Poland, companies that had previously received a pandemic boost did less well, among them the non-woven textile producer PFNonwovens, which primarily serves the personal hygiene products market. As the pandemic spread across Europe, PFNonwovens launched new production of face mask material in response to soaring demand for personal protective equipment (PPE).

According to Fio Bank analyst Josef Dudek, developments on the Prague Stock Exchange were affected by the previous day’s report on successful tests of Pfizer’s coronavirus vaccine. "This means that the financial sector in particular has moved further to higher levels, while technology has failed," he said, quoted by the Czech News Agency. 

Meanwhile, the technology company Avast broke out of its daily losses in the final auction and eventually added a slight 0.36% to CZK137.70. Richest Czech Petr Kellner’s O2 operator increased less than half a percent to CZK227.

Since then the rise has continued. On November 18 the index achieved its highest growth since mid-July. The highest increase was posted by Moneta Money Bank, up by 2.7% to CZK64.70, followed by Erste Group by 2.29% to CZK625.2 and Komercni Banka by 1.39% to CZK584. 

Hungary’s Richter buoyed by vaccine news 

The Budapest Stock Exchange's main BUX index finished the week ending November 20 up 2.33% at 38,205 points. The markets remained on an upward trend since the US elections as the benchmark index rose from 32,000 points. 

^{The Budapest Stock Exchange's main BUX index finished the week ending November 20 up 2.33% at 38,205 points.}

One company to watch is CEE's leading pharma group Richter, whose shares moved up 5.8% to HUF6,975 to end the week. The company kicked off the week on a strong note despite receiving bad news from the European Medicines Agency (EMA), which has recommended the restricted use of its flagship original drug Esyma. Analysts said news about Moderna's vaccine lifted the share price on November 16. Richter extended gains in the middle of the week after Pfizer revised the efficacy of its own vaccine.

The Hungarian pharma company is reported to have supplied enough doses to Hungarian hospitals to treat 5,000 patients with the COVID-19 drug Remdesivir last week, after the government had already ordered some 3,000 doses in the spring. Earlier in the month, Richter reported record revenue in the first nine months on the back of surging sales to the US. The share price has moved in a wide range from HUF6,300 and HUF7,000 in the 20 days.

Bucharest benefits from emerging market upgrade

Southeast Europe’s largest exchange, the Bucharest Stock Exchange (BVB), marked a milestone in September when it held its first session as an emerging market following a long-awaited upgrade decision by FTSE Russel. The September 21 session, the BVB’s first as an emerging market, also marked the inclusion of the first two Romanian companies, Nuclearelectrica and Banca Transilvania, in the FTSE Global Equity Index Series (GEIS). 

A statement from the BVB on October 12 said there had been an immediate impact from the upgrade, as the average daily liquidity increased by 3.5 times in September compared to August 2020, and €25mn. A month later, on November 16, the BVB reported that even amid the downturn in sentiment caused by the autumn second wave of the pandemic, the total value of transactions in the first 10 months of 2020 exceeded the figure achieved for the whole of 2019.

Starting from December 1, MSCI will move Kuwait to the emerging markets league, which will increase the share of companies from the BVB in the MSCI Frontier Markets 100 index. Their weight in the MSCI index will rise from 8% to 10.26% in five stages over a year, according to the agency’s simulations. Thus exchange traded funds (ETFs) that follow the index are acquiring Romanian shares to reflect the new structure of the stock basket.

Under these conditions and amid a positive international environment for the stock markets, the BVB indices made gains, and the blue chip index BET marked a 13.4% advance in the first 24 days of November. Compared to the pre-crisis peak of January-February, the index still lags by 8.6%, which is roughly in line with the dynamics of Euro Stoxx 50 that put in an 18.6% rally in November but still lagged 9.3% behind the pre-crisis peak. 

 ^{The Bucharest Stock Exchange's blue chip index BET marked a 13.4% advance in the first 24 days of November.}

The month was marked at BVB, besides the rise in MSCI weight, by the positive mood prompted by the US elections and successful vaccine news; this meant the return to the best performances seen in the period since the plunge in February-March, though not yet to pre-crisis levels. The quarterly financial reporting season has, however, poured some cold water on the sentiment, as some companies failed to meet expectations. 

Zagreb’s Crobex10 at highest level since March crash

Among the smaller Southeast European exchanges, the two main indices of the Zagreb Stock Exchange, Crobex and Crobex10, rallied on November 16, with the Crobex10 reaching its highest level since before the pandemic-induced crash in March. 

Data from the ZSE show that the Crobex was up by 1.96% to 1,673 points on November 16 to reach its highest level since mid-June. The Crobex10 rose by 1.88% to 1,048, a level not seen since early March.

^{The Zagreb Stock Exchange's Crobex10 index rose by 1.88% to 1,048 on November 16.} 

The rise in prices followed the vaccine news from Moderna, as the launch of large-scale vaccination programmes by next spring would mean a rebound for Croatia’s large tourism sector next summer, a critical part of the country’s economy. The revival in Croatian stocks also came after Moody’s decision to upgrade Croatia to Ba1, just one notch below investment grade.

Trading activity and prices up in the Baltics 

The Nasdaq Baltic stock exchanges saw an increase in trading activity and a decrease in market prices as a result of the pandemic. 

When the vaccine news broke in mid-November, there was a small increase in both turnover and number of trades executed on the market, as well as jumps in some of the Nasdaq Baltic indices – for example, Baltic Benchmark index (OMXBBGI), Baltic 10 index (OMXB10) and Nasdaq Tallinn index (OMXT) all saw a jump of around 3% on November 9.

However, according to information from Nasdaq Baltic emailed to bne IntelliNews, it is difficult to say how much of that was due to the vaccine. Moreover, the Nasdaq Riga market index (OMXR) does not seem to be affected by the news.

In addition, companies that are reliant on tourist flows such as Tallink and Novaturas saw prices rise. Tallink’s share price climbed by 11.6% between November 9 and 11. Novaturas’ share price was up 8.29% in the same period.

Regional fashion retailer Baltika saw a price and trading activity increase. The first spike in trading activity and price was due to an announcement about financial results, while the second increase in price and trading activity was around the time when the news about the vaccines was published.