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Budapest Stock Exchange has impressive 2015

As the central bank took over ownership of the exchange, its BUX index was hitting levels not seen since the economic crisis.

Hungary’s Budapest Stock Exchange (BSE) announced the close to a prosperous year in 2015, reporting overall turnover of HUF 2.225 trillion, a year-on-year increase of 14.6%, with shares accounting for 96.1% of turnover.

Away from the trading floor, a major development was the purchase of majority ownership of the bourse by the Hungarian National Bank (MNB) in late November.

The BUX was the fourth best-performing stock market index in the world in 2015, according to Mónika Kiss, head of research at Equilor Investment Ltd. The BUX consists of 14 different shares and was lifted by the performance of OTP Bank shares, which increased by 57.4%, and Richter, which increased by 55.5%, BSE said.

The Budapest bourse noted there were large fluctuations in the BUX index, which hit a low of 15,687 and a high of 23,964 during the year, but by the end of 2015 the index was up 43.8% as compared to its starting value in December 2014. The rise in the index has not been as marked as this since 2009, when it saw a rise of 73.4%, according to BSE. The BUX continued its growth this year, reaching 24,532.71 on January 13.

OTP, Richter and the other two blue chips, Magyar Telekom and MOL, continued to dominate the market in terms of turnover: In 2015 OTP shares accounted for 55.3% of turnover, MOL shares for 19.3%, Richter shares for 19% and Magyar Telekom shares for 4.8%, BSE said.

The average daily turnover of the bourse came to HUF 8.6 billion, up by a year-on-year 10.3%, while stock market capitalization increased by 33.8% to HUF 5.067 tln, which accounts for 15.3% of Hungary’s GDP, the BSE reports.

Although Hungarian logistics company Waberer’s was planning an IPO on the exchange, it finally withdrew, citing “current market conditions”. No new companies were listed on the bourse during 2015, while Hun Mining, TVK, Business Telecom and Danubius Hotels were all delisted.

State takes over

The MNB announced on November 24 that it had acquired a majority stake in the bourse, having signed a contract to purchase a combined 68.8% of BSE shares from CEESEG, a unit of the Vienna Stock Exchange, and from Osterreichische Kontrollbank. Lajos Bokros, the first chairman of the Budapest Stock Exchange after it reopened in 1990 and a finance minister in the mid-1990s, said the central bank’s purchase of the stock exchange is “absolutely unprecedented” and risky.

Márton Nagy, deputy-governor of the national bank, was elected chairman of the BSE on December 16, and took over on January 1. MNB deputy-governor Ferenc Gerhardt was elected head of the supervisory board, while MNB Director Richárd Végh, responsible for capital markets and market oversight, became CEO of the stock exchange.

Végh said he expects new incentives to be introduced, designed to help raise the number of companies listing shares on the bourse for a period of at least five years. The new companies are to include state-owned companies, enterprises and SMEs alike, preferably with at least five new IPOs, reports say. Market players are reportedly optimistic about the state’s involvement in the exchange, which is expected to stir the still waters of the bourse. Analysts also said that the new management is seen as a guarantee for development.

Nagy said that the MNB should provide some sort of incentive to medium-sized firms to list themselves on the BSE. These would be present on the stock market, “in a separate section, on a separate list”, Nagy said, adding that stimulating the capital market is important since, even if companies can get loans, they still have no access to capital. He also noted that retail investors could also raise demand for shares but they will need suitable incentives to consider share purchases as an alternative to investing in government bonds.