The Slovak koruna traded sideways on
Friday as investors took a cautious approach
ahead of the elections. The left-wing Smer
(29.1% and 50 seats) party won the early
Parliamentary elections with a high margin
before the second, the SDKU (18.4% and 31
seats). The election result leaves many
options open including the market
negative Smer + SNS + HZDS and more
market friendly SDKU + SMK + KDH +
HZDS. Actually, we would not exclude a
grand coalition between Smer and SDKU,
but at the current stage this combination has
a extreme low probability given the preelection
attacks of both parties and their
different election programme.
Today, the market opened rather nervous
and the SKK tends to cede some ground.
However, a big London name started to
support the SKK. We think that the koruna
might still be more vulnerable to negative
news. We expect shaky trading till the
coalition puzzle is resolved. Today, the
auction of SD202 is on the agenda. We
recommend staying on the sidelines.
(CSOB - Investment research)