BUX rises, but underperforms


The Budapest Stock Exchangeʼs main BUX index finished up 0.15% at 23,214.77 Tuesday, after falling 2.95% Monday. It is down 2.95% from year-end, after surging 43.81% last year.

Soaring European peers pulled the BUX up on Monday, but it still underperformed as it is poor in commodity and energy related stocks which fueled the rebound in London and large euro zone markets on a rise of oil prices in the wake of Chinese GDP data.

Oil company MOL was, of course, a contributor to the main indexʼs recovery in Budapest after several days of steep falls, and drugmaker Richter was back in huge favour just as it used to be before the main index recent slide, but OTP Bank was a drag on risk that its relations to the government could sour. The European Commission is investigating whether domestic mortgage lender FHB bank has benefited from illegal state aid following a complaint from OTP Bank, Reuters announced on Tuesday based on documents it has seen. FHB is widely seen as a favourite with the government, analysts add. FHB also ended down 1.10%.

Other domestic economic considerations were also in play.

In a quasi appendix to the IMF update that forecast slowing global but slightly accelerating euro zone economic growth this year, Raiffeisen Bank said on Monday Hungaryʼs GDP growth was set to slow to 2.0 to 2.5% this year (from 2.8-2.9% expected by the government for last year) because of a decline in funds from the EU. Hungary may recover in 2017-2018 only, with growth returning to the 3% annual rate needed to catch up with more developed EU members, but only because of some "troublesome" policies, Raiffeisen said in a note. This year, Hungary will use EU support funds, loose monetary policy, cheap central bank loans and government subsidies for home-building to boost growth, but "thereʼs no answer to what will propel growth once these props disappear," Raiffeisen said.

Hungary will soon face a labor shortage of skilled workers, Raiffeisen also said. The number of those employed in budget-funded public-work schemes has averaged 200,000 since mid-2015 while up to 400,000 Hungarians are working abroad, both improving jobless statistics but leading to a labor shortage, it adds. When adjusted for those in public work schemes, Hungaryʼs jobless rate would be 11%, instead of the official 6.2%. Furthermore, the public work scheme fails to channel labor to the business sector, which, especially in the manufacturing sector, is struggling to find employees, Raiffeisen added.

OTP lost 0.93% to HUF 5,845 on turnover of HUF 6.50 bln from a preliminary HUF 9.99 bln session total, about 5% short of the daily average of the last 52 weeks.

MOL gained 0.11% to HUF 13,215 on turnover of HUF 1.67 bln.

Magyar Telekom improved 0.76% to HUF 400 on turnover of HUF 121 mln.

Richter advanced 1.20% to HUF 5,465 on turnover of HUF 1.64 bln.

The bourseʼs mid-cap BUMIX went out 0.22% higher at 1,646.78.

Elsewhere in the region, WIG 20 in Warsaw was up 1.05%, while Pragueʼs PX garnered 0.71%.

Western Europeʼs major indices were all up ahead of their close on Tuesday, FTSE100 in London 1.52%, DAX30 in Frankfurt 1.36%, and CAC40 in Paris 1.86%.

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