Markets price in political continuity after Duda wins Polish election

BUDAPEST: The Polish zloty edged down along with other currencies in the region and the Warsaw stock market firmed slightly after incumbent president Andzej Duda was declared the winner of the presidential election in a very tight race. According to the latest results, Duda received more than 51% of the votes, while opposition candidate Rafal Trzaskowski got almost 49%.

Duda is expected to help the ruling Law and Justice (PiS) party continue its reforms of the judiciary, which have been criticised by the European Union, and generous social spending programmes. "We expect no material change in the political environment and the PiS-led government's ability to implement its political agenda in full," Morgan Stanley wrote in a note.

"For the zloty, this outcome is relatively positive as the market tends to prefer continuity over uncertainty," Commerzbank analysts added. The zloty was down 0.17% on Monday, trading at 4.4725 versus the euro. Warsaw's equities were up 0.21% by 0837 GMT. "Duda's victory should not have a major impact on the zloty and local assets over the next 12 months or so," Rabobank said in a note.

"However, in the coming years investors may become increasingly concerned if the Law & Justice with full support of Duda continues to tighten its grip on power."

A key power of the president is the ability to veto legislation passed by parliament and he can also propose new legislation and will propose the next Polish central bank governor to the Sejm in 2022. Elsewhere, the Hungarian forint was down 0.1% and was trading at 353.85 to the euro. The Czech crown edged down 0.21% to 26.708 versus the common currency.

The Romanian leu was little moved. Bucharest's equities were up 0.18% while Prague's stocks gained 0.44%. Budapest's blue chip index was down 0.81% with oil company MOL underperforming the wider market and losing 1.74%.