WARSAW: Poland's zloty and Polish bank stocks fell on Monday after the euro-sceptic Law and Justice party (PiS) claimed victory in an election that signals a shift in policy shift for Central Europe's largest economy.
The zloty weakened 0.2 percent by 0907 GMT. Losses by bank stocks dragged stocks lower.
PiS secured 37.7 percent of the vote, just enough to govern alone and well ahead of the incumbent, the pro-EU Civic Platform (PO) at 23.6 percent, according to an unofficial exit poll. It won with a socially conservative campaign that includes new benefits and new taxes on banks.
A parliamentary majority coupled with a PiS-backed president will also give PiS a decisive say in forming Poland's new Monetary Policy Council next year.
"PiS will be able to implement its populist policy agenda unconstrained by coalition partners," RBS said in its research. "We remain of the view that this is unlikely to be market-friendly and may keep Polish risk premia elevated even as a strong economy provides cushions."
Hungarian markets opened with gains across the board, as PiS's victory can make Hungarian assets more attractive, one Budapest-based fixed income trader said.
"This means that the Poles will be the bad boys in the region rather than us," the trader said.
Hungary's forint gained 0.4 percent. Hungarian government bond yields moved little but were down by 4-5 basis points from Thursday's fixing, with 10-year papers trading at 3.34 percent.
The Czech crown and the leu were stable.
Emerging markets currencies gained some support from China's monetary easing and the ECB's signals it may extend or expand its asset purchases.
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