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BUX down again, volumes low

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The Budapest Stock Exchangeʼs main BUX index finished down 0.48% at 21,548.55 Wednesday after falling 0.91% Tuesday. It is up 29.54% from year-end, after losing 10.40% last year.The Budapest bourse fell for a fourth day in a row, pushed down mainly by MOL.

Oil company MOL felt the punch of sinking fuel prices, its withdrawal from a bid for a stake in Slovenske Elektrarne, and media rumors that its CEO, Zsolt Hernadi, had after all not been acquitted by the second instance court in Hungary in December in a criminal case brought against him by a small shareholder in relation of a long-lasting procedure in absentia against Mr Hernadi in Croatia on charges that he allegedly bribed former Croatian Prime Minister Ivo Sanader in 2009 to get management rights for MOL in its Croatian peer, INA. Sanader is serving a prison term in Croatia.

Although the Hungarian second instance courtʼs decision does not incriminate Hernadi in any which way because the rejection of his acquittal was based only on the formal argument that the person who sued him had no right to do so, the outcome means that Hernadiʼs case can be pursued in Croatia, Hungarian news portal Atlatszo.hu said on Wednesday. This could further complicate the relationship between MOL and its Croatian subsidiary, INA, analysts add.

Investors eyeing OTP were scared again by repeated threats from the National Bank of Hungary (MNB). In a newspaper interview on Wednesday, the deputy governor of MNB said that banks needed to be "forced" to lend more and one tool to achieve that was the exorbitant special bank tax, with cuts in the levy being tied to higher lending. This is backtracking on a government pledge to EBRD in February to gradually cut the bank levy with no strings attached, and after the first cut has already been adopted unconditionally by parliament with next yearʼs budget.

The deputy head of MNB also said that the central bank wanted to take a majority stake in the Budapest Stock Exchange (BSE) and list stakes in state-owned companies. If the BSE is not in domestic hands, then the owners will have less interest in developing it, he said.

Another drag in the market is the new public procurement legislation effective from next week. Modifications compared to the present law and the lack of information because the government order enacting and clarifying the law has still not been published might slow public procurements, involving huge amounts of EU funds that drive economic growth in Hungary, analysts said on Wednesday.

OTP lost 0.29% to HUF 5,506 on turnover of HUF 2.99 bln from a preliminary HUF 5.36 bln session total, less than two-thirds of the daily average this year.

MOL fell 1.70% to HUF 13,005 on turnover of HUF 783 mln.

Magyar Telekom ended flat at HUF 382 on turnover of HUF 508 mln.

Richter advanced 0.11% to HUF 4,640 on turnover of HUF 835m.

The bourseʼs mid-cap BUMIX went out 0.79% higher at 1,620.56.

Elsewhere in the region, WIG 20 in Warsaw was down 0.53%, while Pragueʼs PX dipped 0.03%.

Western Europeʼs major indices were mixed ahead of their close on Wednesday, with FTSE100 in London down 0.13%, DAX30 in Frankfurt up 0.82%, and CAC40 in Paris up 0.40%.

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