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BUX falls on OTP and Richter, MOL shines

Telco

The Budapest Stock Exchange's main BUX index finished down 0.33% at 16,199.49 on Thursday, after rising 0.52% Wednesday. It is down 12.74% from the end of last year, after it rose 2.15% in 2013. BUX was mostly stable throughout the day, then fell in last trades, as an upbeat assessment of the US economy by the Fed Wednesday evening, and a swift improvement of Western markets Thursday failed to impress investors in the Budapest parquet.

Before taking a hit in final trades, OTP hardly moved for most of the day. Market rumors of a strong competitor emerging from the state's recent acquisition of MKB bank and Budapest Bank do not seem to materialise any time soon. MKB is in deep trouble, and the central bank took over its control, the prime minister and the governor of the central bank said at a joint press briefing on Thursday.

But reports also on Thursday suggested the government was seeking some kind of strategic cooperation with Erste Bank and Raiffeisen Bank International. This might be a positive for the general banking landscape in Hungary, but not necessarily for OTP, analysts say.

MOL was lifted by a sudden rise of Brent's price on ICE.

Richter still weighed heavily on BUX in the wake of its dire profit warning earlier in the week on its Russian business.

The BUX's low ride, after it fell to a nine-month low on Tuesday, reflects other considerations, too.

Hungary's economic growth may slow further because of the currency crisis in Russia, while the low oil price will weigh further on the country's inflation rate, the National Bank of Hungary (NBH) warned again on Thursday.

In its December inflation report, released Thursday, the MNB said this year's inflation rate would fall to minus 0.2%, while next year's would reach 0.9%, and it forecast GDP growth of 2.3% next year -- lagging the government's projection of 2.5% -- after 3.3% this year.

Hungary's economic growth will be boosted by the central bank through its lending for growth program and the bank may try to add other tools to increase GDP, but such growth is likely unsustainable in the long run, Nomura said on Thursday. Based on the investment choices of the central bank's lending program and the lack of accumulation of underlying productive capital, Nomura sees potential growth remaining at around 2%. Nomura noted that the newest distortions in the economy next year should also be included in the forecast going forward, such as a ban on Sunday trading for large shops and the expansion of sectoral taxes to 2.85% of GDP.

Hungary's gross domestic product growth will slow in the coming two years versus but will still exceed 2%, Ernst & Young said in its quarterly forecast. The house expects Hungary's GDP to rise by 3.2% this year, but it could slow to 2.3% next year and re-accelerate to 2.5% in 2016. This trend may be altered or even broken by a possible escalation of the Russian crisis," Ernst & Young said.

OTP sank 0.80% to HUF 3,705 on turnover of HUF 5.44 bln from a HUF 9.21 bln session total, 17% above the daily average this year.

MOL gained 1.77% to HUF 11,230, further off a more than five-year low on Tuesday, on turnover of HUF 958 mln.

Magyar Telekom won 0.59% to HUF 341 on turnover of HUF 245 mln.

Richter retreated 2.85% to HUF 3,370 another nine-month low, on turnover of HUF 2.47 bln.

The bourse's mid-cap BUMIX went out 0.30% higher at 1,440.59.

Elsewhere in the region, Warsaw's WIG20 was up 1.32%, while Prague's PX rose 1.12%. Western Europe's major indices were all sharply up ahead of their close Thursday, FTSE-100 in London 1.64%, DAX30 in Frankfurt 2.31%, and CAC40 in Paris 2.88%. 

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