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BUX back to the rising path

Telco

The Budapest Stock Exchangeʼs main BUX index finished up 0.46% at 23,431.58 Wednesday after climbing 0.03% Tuesday. It is up 40,87% from year-end, after losing 10.40% last year. With euro zone markets emerging from limited losses to mixed results after Tuesdayʼs dive, the Budapest parquet put in a steady, convincing performance on Wednesday after struggling to remain above the waterline the previous day.

All blue chips rose for most of the day, followed by some profit taking from shares of oil company MOL and Magyar Telekom towards close.

Lack of market moving news left investors to focus on the broad picture. Even though ECBʼs mild easing last week may have been a disappointment compared to exaggerated expectations in Western markets, the message was that accommodation, in the form of new money month in, month out, is here to stay for long, which encourages investors to favor the high-risk, high yield Budapest share market some more.

After a spectacular rise so far this year that secured BUX a place among world champion indices, investors are still lured into the high-risk market by speculation that Hungary, an importer of cheap raw materials and oil products with few links to Chinaʼs wobbling economy, and its weak currency – falling about 1% in the last two days versus the euro – supporting exports to the euro area resulting in strong external balances, is better cushioned against repercussions from a quasi-certain US rate hike next week than many in emerging markets, especially that the US tightening is now expected to come in softer than previously thought.

Another factor must be poor returns from other instruments as lending to the real economy is weak all over Europe, while increasing risks in the bond markets of commodity- and oil-related emerging economies are shepherding funds back into Europe to bump into repellent historic lows in fixed-income yields, including those in Hungary. This also makes the share market attractive, analysts say.

Although the Russian ruble continues to fall versus the Hungarian currency, signs that the Russia-Ukraine conflict is on the backburner also supports the parquet as both are important markets for blue-chips in Budapest.

OTP won 0.85% to HUF 5,920 on turnover of HUF 4.02 bln from a preliminary HUF 6.55 bln session total, about a third short of the daily average this year.

MOL lost 0.29% to HUF 13,520 on turnover of HUF 739m.

Magyar Telekom eased 0.24% to HUF 410.

Richter advanced 0.97% to HUF 5,426 on turnover of HUF 1.42 bln.

The bourseʼs mid-cap BUMIX went out 0.18% higher at 1,617.84.

Elsewhere in the region, WIG 20 in Warsaw was down 1.91%, while Pragueʼs PX garnered 0.08%.

Western Europeʼs major indices were mixed ahead of their close on Wednesday, with FTSE100 in London up 0.30%, DAX30 in Frankfurt down 0.12%, and CAC40 in Paris down 0.21%.

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