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BUX down on emerging market gloom

Telco

The Budapest Stock Exchangeʼs main BUX index finished down 1.58% at 22,420.84 Thursday after rising 1.01% Wednesday. It is up 34.79% from year-end, after losing 10.40% last year.

With no tailwind from anaemic euro zone markets, an emerging market gloom that expands as row materials get cheaper and the US rate hike gets closer engulfed the Budapest parquet, too.

The impact was exacerbated by special emerging Europe anxieties after Poland seemed to follow the Hungarian example, with its parliament approving a bill to allow more than half a million Poles to convert Swiss franc mortgage loans into zlotys. The market priced in that banks will carry 50% of the cost, but the parliament approved an amendment putting 90% on banks. This was a huge blow for the market, reverberating over the region.

Domestic newspaper reports that another two foreign financial institutions, Sberbank and AXA, might leave Hungary, while the sale of a 15% stake in Erste Bank to the Hungarian state, agreed last spring, is on hold due to the Quaestor brokerage house bankruptcy scandal earlier this year, and there has also been no progress in the proposed merger and privatization of domestic banks MKB and Budapest Bank, also weighed on OTP.

The market was subdued also on a report that Hungaryʼs budget deficit widened in July, taking the shortfall for the first seven months of the year to a level almost equalling the full-year deficit target partly as a result of lower payments received in EU support funds than last year.

Oil and gas group MOL and Magyar Telekom corrected down from Tuesdayʼs gains after they posted better-than-expected second-quarter result, although the CFO of Magyar Telekom confirmed on Thursday that a HUF 15-per-share dividend the company indicated earlier it could pay on 2015 earnings appears tenable. Magyar Telekom would thus pay a dividend the first time in three years.

OTP lost 1.91% to HUF 5,690 on turnover of HUF 1.73 bln from a HUF 6.46 bln session total, two-thirds of the daily average this year.

MOL fell 1.77% to HUF 14,685 on turnover of HUF 1.78 bln.

Magyar Telekom shed 0.24% to HUF 412 on turnover of HUF 1.14 bln.

Richter retreated 1.89% to HUF 4,405 on turnover of HUF 1.71 bln.

The bourseʼs mid-cap BUMIX went out 0.01% lower at 1,684.81.

Elsewhere in the region, WIG 20 in Warsaw was down 2.70%, while Pragueʼs PX eased 0.03%.

Western Europeʼs major indices were mixed ahead of their close on Thursday, with FTSE100 in London down 0.03%, DAX30 in Frankfurt down 0.42%, and CAC40 in Paris up 0.03%.

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