BUX bucks European trend

Telco

The Budapest Stock Exchange's main BUX index finished up 0.31% at 17,437.59 Wednesday, after falling 1.37% Tuesday. It is down 6.07% from the end of last year, after it rose 2.15% in 2013.

With rises getting shallower in final trades, the Budapest parquet corrected up amidst general gloom almost all over Europe, as the latest stability report of the National Bank of Hungary (MNB) found mitigating factors that are likely to narrow the financial system's effective net loss to around HUF 730 bln -- and that of the banks to around HUF 608 bln -- from an estimated total gross cost of HUF 950 bln resulting from retail debtor relief legislation already in force.

This balanced the MNB's other, no surprise, findings including that Hungary's banking system will be loss-making this year, that further legislation on retail forex loan conversion into forint debts and the fair banking bill will cause some additional losses and weaken the banking system's resilience in the short run, and that there had been "no significant improvement" in market-based corporate lending, the banking system was still "contractionary" and "not sufficiently supportive of economic growth".

The banking system's stability is not at risk, however, due to capital injections, the MNB said. And the MNB will help clean banks' books by setting up an agency to manage distressed assets with financing of up to HUF 300 bln to buy up "a significant part" of a portfolio it estimated to be worth around HUF 800 bln at book value which is about 60% backed by provisions.

Gainer of the day, OTP advanced also on expectations for a strong third quarter bottom line when it publishes results later this week. MOL will start production at a well in the Akri-Bijeel block in Kurdistan by year-end, the company's head of exploration and production said in Erbil, Kurdistan, on Wednesday.

Mood also improved on news that Hungary's government signed a strategic cooperation agreement with the American Chamber of Commerce in Hungary, while a controversy around a ban of six Hungarian government related persons from entering the US on corruption suspicion still lingers on.

OTP gained 0.74% to HUF 4,080 on turnover of HUF 4.30 bln from a HUF 7.08 bln session total, 13% short of the daily average this year. MOL won 0.64% to HUF 11,880 on turnover of HUF 805 mln. Magyar Telekom rose 0.29% to HUF 350 on turnover of HUF 618 mln. Richter retreated 0.48% to HUF 3,710 on turnover of HUF 1.28 bln. The bourse's mid-cap BUMIX went out 0.41% lower at 1,470.92.

Elsewhere in the region, Warsaw's WIG20 was down 0.18%, while Prague's PX lost 0.98%. Western Europe's major indices were all down ahead of their close Wednesday, FTSE-100 in London 0.33%, DAX30 in Frankfurt 1.82%, and CAC40 in Paris 1.54%.

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