The PX-50 index gained 0.75%, with CEZ showing a powerful rally toward the end of trading after a leading investment bank raised the target price of the electricity producer. We saw substantial demand from international accounts that helped the stock to break well above CZK 500. The stock eventually closed up at CZK 513, i.e. up nearly 4% on the day. Philip Morris was another name in strong demand as investors continue seeking "safe haven" stocks, while Unipetrol got a boost on expectations of the minority shareholders buyout. CME on the other hand erased nearly 4% of its value as a result of an arbitrage gap between the Nasdaq and PSE closing prices. Though powerful gains may initiate some profit taking, we believe the current positive momentum is sustainable. We continue to like Cesky Telecom despite Telefonica’s CZK 456 bid, especially after yesterday’s inflation data which was impacted by the increased monthly tariffs charged by Cesky Telecom.
Consumer prices rose by 0.6% in June, increasing the CPI to 1.8% y/y from 1.3% y/y in May. The growth was driven by higher telecoms and petrol prices.
Unemployment remained unchanged at 8.6% in June.
The June current account ended with a deficit of CZK 6bn due to dividend transfers abroad.