Rate Cuts Fuel Gains
May 04, 2011
The Bel-20 Index of leading shares added 15.73 to 1769.65 on volume of 2.4 billion Belgian francs. On Wednesday, the Bel-20 slipped 6.23 points. After the German Bundesbank cut its securities repurchase rate 30 basis points to 3.0%, the Belgian National Bank followed suit by reducing its central rate to 3% from 3.20%. The rate cuts had an immediate impact on Belgian interest-rate sensitive issues which rose across the board with the exception of electricity utility Electrabel, which declined 10 francs to close at 6,900 francs. Because Electrabel pays a dividend regulated by law, its share is considered by investors as a de facto long-term bond. The utility reacts to long-term bond yields, not short-term yields, traders noted. The yield on Belgium's benchmark 10-year bond late Thursday is 6.57%, down from 6.65% late Wednesday. Among banking shares, Generale Bank rose 50 francs to 11,175, Kredietbank added 150 francs to 9,540 and BBL climbed 80 francs to 5,980. Dollar-sensitive issues were also boosted. Shares in retailer Delhaize, which earns 65% of its sales in the U.S., rose 30 francs to 1,685. A combination of dollar strength and firming oil prices also helped petrochemical group Petrofina, the fourth most active issue of the day, rise 230 francs to 9,840 francs. Late Thursday the U.S. currency traded at 30.790 Belgian francs, up from 30.590 francs late Wednesday, while the mark was quoted at 20.595 francs, down from 20.602 francs Wednesday.
