The Senate passed a controversial bill raising the state subsidy for a mandate a political party gains in the Parliament (Chamber of Deputies or Senate) from CZK 0.5m to 0.9m. Constitutional Court recently struck down a similar law, asking for doubling the current subsidy. The appeal to the Constitutional Court came from Václav Havel, who was afraid that the law would violate competition of political parties by giving unjustified preferential treatment to some of them. It is likely that Mr. Havel does not sign the new law.
The Chamber of Deputies passed into the second reading a bill regulating cash payments. The bill requires all payments to one subject exceeding CZK 1m during a week to be realized through bank account transfers. The goal of the bill is to reduce profit from criminal activities as well as tax evasion. The cabinet would like to see the law effective from January 1, 2002.
Czech stock indices slid down driven by poor sentiment produced by declines in world markets. PX50 fell to its lowest level since April 1999. "The whole market went down, irrespective of sectors. The mood is negative, investors are wary, no one is buying - just selling," quotes Reuters a dealer. Český Telecom lost 5.17 % during a day and hit a four-year low. Among SPAD stocks, only Unipetrol bucked the trend, gaining 1.96 %, but traded volume was low.
Komise pro cenné papíry (KCP) is going to allow emitents publishing preliminary prospectus, introducing their company to potential investors. The step would remove one of many barriers hindering development of IPOs in the Czech Republic. KCP and the Association for the capital market also prepare a proposal of a bundle of legal changes needed for acceleration of the IPO process. At present, the process takes 10 to 22 months.
The Czech crown stayed in a narrow range against the euro on Wednesday. Late on Wednesday CZK was down at 34.64/65 to the EUR from 34.58/60 late Tuesday but firmer from morning low of 34.71/73. CZK/USD firmed to 38.45/46 from 38.78/79 late Tuesday. Some dealers say that a visible progress in the privatization of České radiokomunikace, which would signal an inflow of foreign currency, could boost the currency.
Bond prices rose again, most in the segment of state bonds. CR 6.95/16 gained 30bps, CR 6.30/07 rose 22bps. Among corporate bonds, investors strongly demanded KOB 10.875/04, the price of which jumped 38bps. Comments following today’s meeting of the ČNB Board could move the market.
| late April 4 | bond yield | late April 3 |
| CZK/EUR | 34.64/65 | - | 34.58/60 |
| CZK/USD | 38.45/46 | - | 38.78/79 |
| State 6.75/05 | 104.70/00 | 5.36/28 | 104.65/95 |
| State 6.95/16 | 107.70/00 | 6.14/11 | 107.40/70 |
(Martin Kupka)