INSTANT VIEW 2-Czech Oct C/A shows unexpected surplus

                                
 PRAGUE, Dec 11 (Reuters) - The Czech current account showed
a 12.41 billion crown ($709.5 million) surplus in October,
defying market expectations for an 11.0 billion crown deficit,
data showed on Friday.
                                
 The outcome was affected by a surplus on the balance of
trade in goods and services -- respectively showing surpluses of
19.84 billion crowns and 3.83 billion crowns.
                                
 October foreign trade overall showed a 17.5 billion surplus,
double the forecast.
                                
 The income balance -- which includes dividend payments and
other profits booked by foreign companies -- showed a 9.92
billion crown deficit, smaller than the last year's 23.46
billion gap and than the 25.96 billion shortfall in September.
                                
 It reflected a dividend payment of 0.3 billion crowns from
Czech subsidiaries to their foreign parent firms and estimated
reinvested earnings of 7.8 billion crowns, the central bank
said.
                                
 The 12-month rolling deficit dipped to 48.23 billion crowns
($2.76 billion), or 1.3 percent of estimated 2009 nominal gross
domestic product (GDP), according to Reuters calculations.
****************************************************************
KEY POINTS:
(CZK billions)            Oct           Sept        Oct forecast
Current Account          12.41         -5.87       -11.5
Financial Account        -5.94        -10.58         n/a
Net Direct Investment     6.11        -30.26         n/a

 (For full table, double click on [ID:nPRA004888])
                                
 
- The balance of current transfers includes a surplus of 0.9
billion crowns on transfers from the EU budget to the Czech
Republic.
- The capital account included a surplus of 1.7 billion crowns
on transfers from the EU budget.
- The annual current account deficit total is decreasing.
- The capital outflow on the financial account was around 5.9
billion crowns under ECB methodology.
- The net inflow of direct investment was 6.1 billion crowns and
was affected by expected reinvested earnings.
- The inflow of portfolio investment of 28.7 billion crowns was
due primarily to issues of bonds by state-owned entities abroad.
- The total volume of bonds issued abroad exceeded 19 billion
crowns.
- The inflow of capital into the Czech Republic was also
affected by the sale of part of foreign debt securities from
Czech entities' portfolios and a rise in holdings of government
bonds by foreign investors.
- The annual net direct investment inflow total is decreasing.
- The annual net portfolio investment total is showing an inflow
of funds.
- Other investment showed a deficit of 37.4 billion crowns as a
result of a change in the short-term international position of
banks (a rise in short-term assets) and an increase in the
short-term assets of the corporate sector abroad.
- The government drew loans amounting to 2.8 billion crowns from
the EIB for the development of transport infrastructure.
- The Czech central bank's foreign currency reserves (adjusted
for valuation changes) rose by 2.6 billion crowns.
                                
 
                                
 COMMENTARY:
                                
 VOJTECH BENDA, SENIOR ANALYSTS, ING WHOLESALE BANK
                                
 "The trade balance is good mainly due to exports that have
stabilized while imports continued to fall due to a weak
domestic demand."
                                
 "The favourable development should continues in coming
months and should help the crown strengthen."
                                
 
                                
 JAN VEJMELEK, HEAD OF ECONOMIC RESEARCH, KOMERCNI BANKA
                                
 "The current account surprised positively a fourth month in
a row. The main reason is a significantly better result of
foreign trade but the deficit in the income balance fell
markedly as well."
                                
 "Both is a result of a weak economic activity in the Czech
Republic."

                                
 
                                
 MARKET REACTION:
                                
 The crown <EURCZK=> weakened to 25.81 per euro from 25.75
just before the data.

                                
 
  BACKGROUND:
- Analyst expectations before data release       [ID:nGEE5B21SG]
- Czech Oct foreign trade figures                [ID:nGEE5B6074]
- Polish Sept C/A data                            [ID:nLA628048]
- Slovak Sept C/A data                           [ID:nPRG003798]
- Hungary's Q2 C/A gap                            [ID:nLT293744]
- Report on last Czech c.bank rate decision.......[ID:nL4183884]
                                
 [ID:nPRG003761] [ID:nL5208270 [ID:nL5527536] [ID:nPRA004836]

LINKS:
- For further details on October of payments numbers and past
data, Reuters 3000 Xtra users can click on the Czech National
Bank's website:
                                
 http://www.cnb.cz/en/statistics/bop_stat/

- For LIVE Czech economic data releases, click on       <ECONCZ>
- Instant Views on other Czech data                 [CZ/INSTANT]
- Overview of Czech macroeconomic indicators            [CZ/ECI]

- Key data releases in central Europe    [CEE-CONVERGENCE-WATCH]
- For Czech money markets data click on                <CZKVIEW>
- Czech money guide                                      <CZK/1>
- Czech benchmark state bond prices                   <0#CZBMK=>
- Czech forward money market rates                      <CZKFRA>

 (Reporting by Jana Mlcochova; editing by Chris Pizzey)