BUX down in continuing correction

Telco

The Budapest Stock Exchangeʼs main BUX index finished down 2.62% at 21,326.99 Friday after falling 0.80% Thursday. It is up 28.21% from year-end, after losing 10.40% last year. Taking its cue from diving European indices, exacerbated by baling-out usual on a Friday, the Budapest parquet plunged for a second day, further down from a close to four-year high on Monday it reached at a year-to-date pace that made it a champion in Europe.

Local worries are also at play, including an obligation of banks to top up a compensation fund for duped clients of three brokerages that collapsed since February, a legislative measure the chairman-CEO of OTP called "unreasonable and unjust" and detrimental to lending at Fridayʼs AGM of Hungaryʼs largest lender.

Lacklustre market based lending is one of the on-going weaknesses of Hungaryʼs economy.


Some other remarks of the OTP chief also confirmed the animosity between his bank and the government.

OTP will return to profitability this year, the chairman-CEO told the AGM, but declined to provide a specific forecast for this yearʼs bottom line. He also pledged Friday to increase its dividend in coming years, again without providing details.

The AGM approved paying a dividend, equal to the previous amount, from profit reserves after OTP incurred its first loss in its 66-year history last year, due to its Russian and Ukrainian markets, and special taxes in Hungary.

Another source of worry is the uncertainty concerning the future of several hundred billion forints in EU economic development funding, after the EU confirmed their suspension earlier in the week, citing "systemic weaknesses of project selection".

OTP lost 3.35% to HUF 5,570 on turnover of HUF 8.76 bln from a HUF 13.02 bln session total, nearly a third above the 13.02daily average this year.

MOL dropped 2.53% to HUF 14,425 on turnover of HUF 2.92 bln.

Magyar Telekom fell 2.34% to HUF 418 on turnover of HUF 274 mln.

Richter retreated 2.14% to HUF 4,110 on turnover of HUF 923 mln.

The bourseʼs mid-cap BUMIX went out 0.73% lower at 1,575.57.

Down 4.06% from its latest nearly four-year closing high at 22,230.10 on Monday, the BUX ended the week still up 0.83%, after garnering 5.75% over the previous week.

OTP gained 1.24% after surging 3.81% last week,

MOL improved 3.18% after soaring 9.73% the previous week.

Magyar Telekom eased 1.42% after increasing 2.66% last week.

Richter got rid of 1.20% over the week, after surging 6.69% over the previous week.

The BUMIX fell 0.16% after rising 2.71% last week.

Elsewhere in the region, WIG 20 in Warsaw was down 0.82%, while Pragueʼs PX sank 0.76%. Western Europeʼs major indices were all down ahead of their close Friday, FTSE-100 in London 1.11%, DAX30 in Frankfurt 2.56%, and CAC40 in Paris 1.58%.

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