Czech market erased gains and dropped close to 1% of the index value

Czech market erased gains and dropped close to 1% of the index value. CEZ and Komercni were the most targeted stock of the sellers. CEZ dropped below CZK 800 after S&P lower rating outlook on Hungary. Even though Hungarian macro concerns have little relation to the Czech situation, some of the regional accounts decided to offload entire CE3 universe. To our surprise Komercni did not bounce back up despite no change in the interest rate level. We believe recent weakness of the stock is attributable to the possible rate cut decision that did not occur. Unipetrol broke all time high again and CZK 300 level. Today, Czech will benefit from global positive sentiment. Overnight, overseas developed and emerging markets saw strong rally, we expect same to occur on the Czech market today as well.