Eastern European Stock Markets Are Prepared for Year 2000 Computer Problem

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Eastern European Stock Markets Are Prepared for Year 2000 Computer Problem

By Rodney Jefferson

Eastern European Markets Seen Resilient to Y2K Bug (Update2)

(Updates OTP share price in 6th paragraph; adds new Budapest market opening time in 17th paragraph.)

Warsaw, Dec. 13 (Bloomberg) -- Telekomunikacja Polska SA's shares were at a nine-month low at the end of September. Then the Polish phone company went public with its two-year-old program to prevent its computers from freezing up on New Year's Day.

The shares have since rebounded more than 30 percent, adding $2.1 billion to the company's value, as investors have grown more confident that TPSA's 300 technicians and 500 million-zloty ($120 million) investment will keep its 25,000 computers working on Jan. 1, when some software may recognize the two-digit shorthand '00 as 1900 instead of 2000, the so-called Y2K computer bug. ``Nobody knows what'll happen but life won't stop in 2000,'' said Jury Ostrovsky, co-manager of the $300 million Pictet Targeted Fund Eastern Europe and a TPSA shareholder. Y2K ``is a very short- term issue.''

Investors' confidence is rising that most companies in Eastern Europe -- long seen as among the most vulnerable to Y2K-related problems because of lack of money -- have done enough to keep potential breakdowns to a minimum. That's helped boost share prices, especially in the telecommunications, banking and energy industries, which rely heavily on computers.

Shares in Hungary's main phone company, Matav Rt., and its biggest bank, OTP Rt., are trading at all-time highs after falling earlier this year. TPSA's recent rally comes after a 34 percent decline in the three months before it told shareholders their concerns were unfounded.

OTP rose 1.5 percent to trade at 13,860 forint in Budapest after declaring it's ready for Y2K at a news conference. The stock's up more than 9 percent from a week ago. TPSA shares closed today at 26.40 zloty, 11.8 percent higher than a week ago. ``We did our best,'' said Pawel Andryszkiewicz, the director of the TPSA computer team. ``If you ask me will you be able to make a call on Jan. 1, I'd tell you yes.''

`Reasonable Job'

Companies like TPSA, Matav and OTP are among the most-traded stocks in the region's most-active markets of Poland and Hungary. Both countries have spent millions of dollars to avoid computer failures and make sure energy, transportation and communications systems continue to function at the turn of the millennium. ``Poland, Hungary, and the Czech Republic did a reasonably good job to identify the problems,'' said Kevin Moore, an economist at the USAA Emerging Markets Fund, which invests $265 million in Central and Eastern Europe from San Antonio. Y2K ``is one of the areas difficult to get a handle on.''

The region's stock exchanges, brokerages and clearing houses have rearranged opening hours and settlement dates across the New Year's period in most cases. Some central banks are prepared to give commercial banks more cash in case there is a run on deposits by nervous savers.

Stark Contrast

That apparent readiness to tackle the computer bug is in stark contrast to investors' perceptions six months ago.

ING Barings said in a June report that most emerging markets in Europe were between 18 and 24 months behind with preparations and many companies were reluctant to even talk about the subject. ``The Czech market appears not to have confronted the Y2K bug in the belief that it will remain unaffected by it,'' the report said at the time.

Since then, most of the region's markets have decided to take precautions.

Poland's Warsaw Stock Exchange is the region's only main stock exchange that hasn't changed its schedule and will resume trading on Jan. 3.

In Russia, where 11 time zones mean technicians will have to watch for disruptions for almost half a day, the Russian Trading System will close on Dec. 31 and reopen Jan. 5, two days later than normal to allow time to fix any glitches that occur.

The Budapest Stock Exchange will close on Dec. 30 and reopen Jan. 4, earlier than the original plan of Jan. 6. The government moved the sale of two- and five-year bonds a day ahead to Dec. 29th before trading stops until Jan. 3.

The Prague Stock Exchange, which closes Dec. 30, will reopen Jan. 4 or Jan. 5, with a final decision coming later this month. In addition, the Czech Bond Traders Club said members won't give mandatory price quotes between Dec. 20 and Jan. 4. The central bank said no settlements will be made between Dec. 31 and Jan. 3. ``The problems related to the Year 2000 are real and serious,'' said Artur Szeski, an analyst at Pekao CDM Securities in Warsaw. ``I wouldn't underestimate them.''

-- Midas (Midas_Mulligan_2000@yahoo.com), December 13, 1999


Lets hope they czeched the code properly...

-- Andy (2000EOD@prodigy.net), December 13, 1999.

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