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The Prague Stock Exchange’s PX index reached 2,805 points on February 4, its highest level on record. By March 13 it had fallen to 2,512, down 1.29 percent on the day and roughly 10 percent off the peak, per Trading Economics data. Over the past month the index has declined 5.21 percent. Year-over-year it is still up 21 percent, which says more about how strong 2025 was than about what March has done. The structure that made Prague one of Europe’s best-performing markets in 2025 is being tested by exactly the kind of shock it was never designed to handle well.
What Changed and When
Prague had a genuine bull run through the second half of 2025 and into early 2026. The PX total return index, which includes dividends, delivered +35.4 percent for full-year 2025, per Hospodářské noviny calculations. That made it one of the strongest European indices of the year. Banks benefited from the Czech National Bank holding rates higher for longer than Western counterparts. ČEZ benefited from elevated European electricity prices. Dividend yields across the twelve-stock index remained among the most attractive on the continent. Foreign institutional money took notice.
February 4 was the local peak at 2,805. Then came February 28, and the US-Israeli strikes on Iran. Komerční banka’s trading desk summary from March 6 documented what happened in the first war week: a relatively calm Monday, a 2.41 percent sell-off on Tuesday March 3, partial recoveries mid-week, and a further 1.15 percent decline on Friday. The weekly total was -2.24 percent to 2,592. The following week continued lower, with the March 13 session closing at 2,512 and -1.29 percent. From the February high to mid-March represents a drawdown of roughly 10 percent.
Why Prague Sold Off When It Should Have Been Protected
The structural argument for Prague in a $100 oil environment seemed straightforward on paper. ČEZ generates electricity primarily from nuclear, not oil. The banking sector’s margins benefit from sustained high rates, which a supply-side inflation shock makes more likely to persist. Neither of those things has changed. So why is the index down 10 percent from its peak?
The answer has two parts. The first is that Prague, for all its structural advantages, is a small and relatively illiquid market. When global risk-off hits, international fund managers reduce Central European exposure as part of broader emerging-market and small-market retrenchment, regardless of domestic fundamentals. The Czech koruna’s move above 24.40 CZK/EUR in the second week of March, flagged by ČSOB’s dealing desk on March 13, compounds the problem for foreign holders whose returns are measured in euros. A 5 percent koruna depreciation is a 5 percent headwind on top of any index decline for a euro-based investor.
The second part is Germany. Czech exports are tied to German demand at a rate of approximately 33 percent of total exports, per economy of Czech Republic data. Germany’s factory rebound was just beginning to materialise when the oil shock arrived. German industrial output is now facing a second headwind inside six months, and Prague’s manufacturing and export linkage means that channel transmits into Czech earnings expectations even if it never shows up in the ČEZ income statement.
ČEZ: Record Production, Political Uncertainty
ČEZ presented its full-year 2025 results in early March with headline nuclear electricity production at record levels. The company confirmed annual targets were met, and J&T Banka noted in its March 13 conference call summary that ČEZ now shows lower sensitivity to emissions permit price movements. That reduces one of the previous volatility drivers. The stock is not without risk: discussions about potential renationalisation have circulated in Czech political debates for several years. The current government’s energy policy stance remains a watchpoint for institutional investors who remember the previous period of regulatory uncertainty.
What the oil shock does for ČEZ is genuinely ambiguous. Brent crossing $100 for the first time since August 2022 drives European electricity wholesale prices higher through the merit order mechanism, which benefits baseload nuclear. But it also raises Czech household energy costs, compresses real incomes, and slows the domestic consumption that underpins service sector earnings across the index. The direct ČEZ tailwind is real. The indirect macro drag is also real. The market appears to be pricing both simultaneously.
The CNB on March 19: The Pivot Point
The Czech National Bank’s board meets on Wednesday March 19, and it is the single most important near-term catalyst for the PX. The CNB’s current two-week repo rate stands at 3.50 percent, set at the May 2025 meeting and held unchanged at the February 5 board session, per CNB official data. The February forecast, published the same day, projected Czech inflation staying below the 2 percent target and GDP growth of approximately 3 percent, with rates expected to remain approximately stable in the first half of the year. That forecast contains no Hormuz premium whatsoever. It was based on data available as of January 23.
The question on Wednesday is whether the board adjusts its language to reflect the oil shock. Komerční banka’s own economics team, in its January 29 macro forecast, noted that core inflation would stay “appreciably higher” at around 2.3 percent due to services and the government’s more expansionary fiscal stance, and concluded that rate cuts could not be ruled out but were not the base case. That was the pre-war read. If the board signals on March 19 that it is watching energy inflation risks and sees no immediate case for easing, bank stocks in the PX will benefit from the same high-rate dynamic that sustained margins through 2024 and 2025. If it signals concern about the growth impact of the oil shock and opens the door to cuts, the bank-heavy composition of the index faces a different dynamic.
The 52-Week Picture and What It Means
The PX is still up 21.37 percent year-over-year per Trading Economics. The 52-week low was 1,902 points. The high was 2,805. At 2,512, the index is sitting roughly midway between those two extremes. That is not a collapsed market. It is an index that ran very hard into February on a combination of genuine fundamental improvement and yield-seeking international flows, and has since given back the most speculative portion of that move.
Put that in context. The S&P 500 is approximately 3 percent below its January 2026 high. The PX is approximately 10 percent below its February high. Prague has underperformed Wall Street since the oil shock, not outperformed it. Europe’s energy vulnerabilities were already being repriced before the Strait closed, and Prague is not immune to the regional dynamics even if its nuclear generation mix provides partial insulation. Whether the CNB meeting on Wednesday, and the broader trajectory of Hormuz, stabilises that divergence or extends it is the question that defines Prague’s market performance through the end of Q1.
