BUX down in thin trade

In the afternoon dismal September US non-farm payroll data pushed euro area indices temporarily back into the red, and losses in Budapest deepened as worries spread that amid a global slowdown and the fallout of the Volkswagen emission debacle CEE economies and assets might weather a still possible nearside US rate hike less well than previously thought.

New domestic anxieties concern mainly the possibility that the government could take up the hatchet against the countryʼs banks. The day before a speech of Hungaryʼs cabinet chief suggested the government wanted to survey if banks raised lending in line with government expectations, and if not, it might review an agreement signed with the European Bank for Reconstruction and Development (EBRD) in February, an understanding on decreasing banksʼ special levies next year and on, with no official condition on lending targets attached.

At several economic conferences this week, a host of analysts and domestic bank heads cited obstacles to increased corporate lending, including lack of creditworthy demand amid risks to growth, including waning competitiveness of Hungaryʼs economy.

Of the speech at an economic forum by the cabinet chief it also turned out that the government was scrambling hard to find ways and means to maintain economic growth above an annual 2% after Hungaryʼs GDP growth slowed to 2.7% in the second quarter from 3.5% in the first quarter.

Hungaryʼs annual exports and imports growth slowed well below the year-to-date average pace in August, a second reading of official data showed on Friday.

Meanwhile, the European Union is threatening to take action against Hungary over its laws limiting the flow of migrants and refugees through its territory.

Director of Migration and Asylum at the European Commissionʼs Directorate General of Home Affairs, Laurent Muschel, told EU lawmakers Thursday that there are "a number of issues that we find problematic in their new legislation and said "we are ready to take any further steps if needed." He added the Commission would lay out its concerns in a letter to Hungary by the end of the week.

Earlier some Western leaders, including European Commission president Jean-Claude Juncker and German Interior Minister Thomas de Maiziere hinted at the possibility of curtailing EU funds for member states that resist EU plans on sharing the refugee burden.

Even with no such measure, Hungary can count on HUF 1,300 bln to 1,600 bln in EU funding next year instead of at least HUF 2,000 bln deemed necessary by to government to produce economic growth on a scale similar to this year, the cabinet chief confirmed on Thursday.

Hungaryʼs central bank will soon start the sale of state-owned MKB Bank in a tender based on invitation, looking to close the transaction by the end of the year, the National Bank of Hungary (MNB) said in a statement on Friday. Analysts pondered, with no clear answer in view, whether OTP Bank is interested and if yes, was it to the liking of the government.

OTP lost 1.53% to HUF 5,288 on turnover of HUF 3.37 bln from a preliminary HUF 5.56 bln session total, nearly two-fifths short of the daily average this year.

MOL dropped 0.24% to HUF 12,460 on turnover of HUF 1.37 bln.

Magyar Telekom ended flat at HUF 388 on turnover of HUF 175m.

Richter retreated 0.90% to HUF 4,420 on turnover of HUF 618m.

The bourseʼs mid-cap BUMIX went out 0.25% lower at 1,608.46.

Over the week, the BUX was down 0.18% after losing 1.36% in the previous week.

OTP sank 1.53% after dipping 0.70% last week.

MOL gained 1.05% after diving 4.16% in the preceding week.

Magyar Telekom rose 0.52% after ending last week flat.

Richter declined 0.26% after giving up 0.11% over the previous week.

The BUMIX recovered 0.44% after sliding 0.76% over last week.

Elsewhere in the region, WIG 20 in Warsaw was down 0.77%, while Pragueʼs PX fell 0.42%.

Western Europeʼs major indices were all up ahead of their close on Friday, FTSE100 in London 1.00%, DAX30 in Frankfurt 0.41%, and CAC40 in Paris 0.74%.