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BUX falls, but outperforms most European peers

Telco

The Budapest Stock Exchangeʼs main BUX index finished down 0.14% at 22,789.26 Tuesday after rising 1.79% Monday. It is up 37.00% from year-end, after losing 10.40% last year. European mood that turned cautious on dismal first-quarter UK GDP data and uncertainty around the US Fedʼs intentions as its Wednesday statement draws closer sent the Budapest parquet down from a second nearly four-year closing high in as many days on Monday.

However, the main index held out in the black for most of the day, supported only by MOL which bucked market trend on rising fuel prices, its new exploration acquisition in the North Sea announced last week, and probably on a note from Fitch Ratings which raised anticipations for MOLʼs gas business.

While the process may take years, the European Commissionʼs formal objections last week to Gazpromʼs business practices in eastern Europe may accelerate the trend towards market-based pricing, Fitch Ratings said on Tuesday. The final outcome is unpredictable at this stage, Fitch said, and added that when oil prices were over USD 100/bbl, spot gas prices were usually below oil-linked prices, but "lower oil prices make the spot gas price advantage to customers less clear."

MOL is in the gas business mainly through a 40% stake in gas distributor MET Magyarorszag.

But in final trades, while MOL only pared its gains after a more than 4% surge intraday, still ending at a one-and-half-year high, the rest of the blue chips pulled the BUX down.

After stellar rises in recent weeks, crowned on Monday with an announcement that one of its products got underway to receive a licence to be used more widely in the European Union, Richter corrected down with increasing speed as its dividend proposal, lower than last year, reminded investors of ongoing worries for the pharma companyʼs Russian and Ukrainian business. Strengthening on firmer oil prices to a more than four-month high against major currencies and the Hungarian forint, too, the Russian rouble also helped Richterʼs recovery to a 15 month-high by Monday, but the rouble quickly corrects down this week on expectations for a large policy rate cut in Russia.

OTP also fell while Standard & Poorʼs said in an analysis on Tuesday that risks to the Hungarian banking system were reduced substantially by the government’s promise to lower the special bank levy, but the sector will not begin to return to moderate profitability before next year.

The Chinese market regulatorʼs statement on Tuesday that cautioned investors against "blindly" buying stocks -- knocking Chinese stocks off seven-year highs in their biggest one-day loss in two months -- reverberated all over emerging markets and beyond, including Budapest as well, after the BUX widely outperformed most European indices year-to-date.

OTP lost 0.43% to HUF 5,982 on turnover of HUF 5.57 bln from a HUF 19.90 bln session total, nearly twice the daily average this year.

MOL won 1.68% to HUF 15,130, its highest close since October 21, 2013, on turnover of HUF 10.09 bln.

Magyar Telekom fell 0.98% to HUF 406 on turnover of HUF 265m.

Richter retreated 1.30% to HUF 4,702 on turnover of HUF 3.71 bln.

The bourseʼs mid-cap BUMIX went out 0.18% lower at 1,613.54.

Elsewhere in the region, WIG 20 in Warsaw was down 0.02%, while Pragueʼs PX dropped 0.99%. Western Europeʼs major indices were all down ahead of their close Tuesday, FTSE-100 in London 1.17%, DAX30 in Frankfurt 1.78%, and CAC40 in Paris 1.86%.

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