BUX corrects swiftly up, but volumes remain modest

The Budapest bourse got a lift in modest volumes from investors not frightened by volatility. The BUX followed soaring Western markets unhindered, as anxieties for the real economy in Hungary and abroad were overtaken by renewed hopes for the US Fed to stay pat for a longer period of time than previously thought, and for the ECB to deliver on its hints at widening its easing programme sooner than later, feeding the marketplace with more cheap money that shuns the low yielding real economy.

Alarm signals continued to blink as the dayʼs data showed annual retail trade growth in Hungary slowed sharply for a second month in August in absolute terms, and also decelerated in calendar-adjusted terms, lagging the year-to-date average as well. Turnover growth slackened in all branches, i.e. trade of food, non-food, and automotive fuel goods, which comes as a surprise, in a month which is traditionally the peak of the holiday season. Thus, neither the additional consumption of foreign tourists, nor of emigrant Hungarians visiting home in hundreds of thousands seemed to make up for local consumption which must have been unusually restrained despite the season, analysts say. Apparently, most of any statistical growth is supported only by the base effect of connecting shop tills to the tax office, a process which ended at the end of last year, they add.

But this, too, rather than warning them away, convinced investors that budgetary stimulus and further monetary easing could be around the corner in Hungary as well.

Hungarian forward rate agreement (FRAs) contracts price in a 10-20% chance of a rate cut by the National Bank of Hungary (MNB) in the first half of next year, a Reuters survey showed on Monday.

Last week, Hungaryʼs cabinet chief said the government started thinking up ideas and measures to maintain economic growth above an annual 2%, a threshold which, however, would still seriously trail the 3.5% beat in the first quarter and 2.7% in the second. Ideas extend from transport investments to support for home construction, and for businesses and local councils that are not eligible for EU grants, from development of electronic infrastructure to curtailing bureaucracy and boosting lending by state-owned financial institutions and saving cooperatives, he said.

OTP won 1.27% to HUF 5,355 on turnover of HUF 2.15 bln from a preliminary HUF 5.50 bln session total, less than two-thirds of the daily average this year.

MOL gained 1.89% to HUF 12,695 on turnover of HUF 1.78 bln.

Magyar Telekom rose 0.77% to HUF 391 on turnover of HUF 142m.

Richter advanced 0.68% to HUF 4,450 on turnover of HUF 1.37 bln.

The bourseʼs mid-cap BUMIX went out 0.50% higher at 1,616.53.

Elsewhere in the region, WIG 20 in Warsaw was up 2.48%, while Pragueʼs PX garnered 0.90%.

Western Europeʼs major indices were all up ahead of their close on Monday, FTSE100 in London 2.63%, DAX30 in Frankfurt 2.65%, and CAC40 in Paris 3.43%.