The current ODS Minority Government will ask the Lower House for confidence today. The Government needs 101 votes out of the total 200 seat Parliament. The opposition Social Democrats (CSSD) and the Communists together have 100 seats and have already stated no support for ODS Government. Should ODS fail to win the confidence, the President shall ask the same/another person to form a Government. CSSD leader and former PM Jiri Paroubek, hopes to get a chance to form a Government indicating that he may manage to receive 101+ votes.
Our view:
We expect the ODS Government, not to receive the confidence today. Apart from a psychological impact, there shall not be any fundamental impact on Czech blue chips on the downside. Even without confidence, in theory the minority Government may stay in power long enough to go ahead with the sale of ~7% stake in CEZ, nevertheless, which, however, should be already priced in. We remind that CEZ, itself is interested in share buy-back (may buy up to 10% of its capital), hence the risk of share overhang has been diminished. Shall ODS win the confidence, Philip Morris CR may benefit from more gradual excise tax increases while generic drug producers from lower drug reimbursements (in the longer run).