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BUX finishes above the waterline

Telco

The Budapest Stock Exchangeʼs main BUX index finished up 0.03% at 23,324.90 Tuesday after falling 1.31% Monday. It is up 40.22% from year-end, after losing 10.40% last year.

The Budapest parquet hugged small gains throughout the day, to complete trade just above its previous close.

While most European indices fell on another set of dismal Chinese trade data from November that pressured commodity and exports related shares, the BUX was underpinned by domestic industrial and inflation data, and drugmaker Richter, which hugely outperformed after the relevant European authority accepted its regulatory submission for a new product.

Hungaryʼs annual industrial production growth accelerated more than expected in October, reaching an above-10% level the third time this year, official statistics out on Tuesday showed.

However, closer analysis reveals an uneven picture as much of the growth was down to vehicle manufacturing and related industries, as usual, while the rest struggled.

And overall growth slowed from September in monthly comparison.

November consumer price inflation came in at an annual 0.5% after 0.1% in October, but below market forecasts for 0.6-0.7%, and the National Bank of Hungaryʼs (MNB) projection for 0.8%, far from the 3.0% target of the central bank.

Investors welcomed the news as it showed deflation may be over with inflation now capable to stay above zero after falling below it most of the past two years.

But again, the details were not so positive, as the headline figure was fueled less by demand growth than by narrower supply, especially of food products, while tepid core inflation decelerated.

Month-on-month inflation stagnated in November after a 0.2% rise in October.

The smaller-than-expected inflation paves the way for the MNB to announce further unconventional easing measures next week, but this prospect did not move the market after the central bank has already quasi-promised such steps two weeks ago, and its similar steps in the past have given no palpable boost to the slowing Hungarian economy.

In a fresh quarterly analysis on Tuesday independent local think tank Fiscal Responsibility Institute said that there are serious problems in official measurements of capital and labour, which makes official economic data questionable. The institute warned that investment were falling, emigration of workforce was growing, therefore potential economic growth ought to gradually decline. Hungaryʼs economy is overheated by EU funds and when these fall back, Hungary would stand there "naked", the house said.

Richter announced on Tuesday that the European Medicines Agency (EMA) has accepted its regulatory submission for its proposed biosimilar to California-based AMgen’s Neulasta. Richter signed a license and distribution agreement for the product earlier this year with Germany-based Stada Arzneimittel.

OTP lost 0.76% to HUF 5,870 on turnover of HUF 3.47 bln from a preliminary HUF 5.81 bln session total, about a third short of the daily average this year.

MOL rose 0.04% to HUF 13,560 on turnover of HUF 560m.

Magyar Telekom shed 0.72% to HUF 411 on turnover of HUF 151m.

Richter advanced 1.21% to HUF 5,374 on turnover of HUF 1.54 bln.

The bourseʼs mid-cap BUMIX went out 0.13% higher at 1,614.95.

Elsewhere in the region, WIG 20 in Warsaw was down 2.26%, while Pragueʼs PX dropped 1.62%.

Western Europeʼs major indices were all down ahead of their close on Tuesday, FTSE100 in London 1.07%, DAX30 in Frankfurt 1.59%, and CAC40 in Paris 1.25%.

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