BUX follows down European peers


The Budapest Stock Exchangeʼs main BUX index finished down 0.90% at 22,374.16 Wednesday after rising 0.45% Tuesday. It is up 34.51% from year-end, after losing 10.40% last year.

   The Budapest bourse followed European peers down the slope while global investors wonder if a combination of worse-than-expected US company results, falling energy and metal prices on questionable Chinese demand, the strong dollar and the looming US base rate hike presages another slowing of global growth.

   The summer holiday season limited volumes and on-going local worries added to the spleen in Budapest.

   Official figures showed general government deficit in Hungary jumped by nearly 60% to HUF 813.7 bln in the first half compared to a year ago, partly because the EU suspended or interrupted payments in several operative programmes, pending investigations into suspected market-bending. These payments fell HUF 156 bln, or almost 30%, from a year ago, while the government continued to pre-finance projects.

   Also, foreign investors can hardly forget a threat from the governmentʼs cabinet chief late last week, who said foreign companies that "run to Brussels to denunciate" Hungaryʼs government policies can expect alternative and even higher taxes than those they have complained of. Previously, the European Commission prohibited Hungary from applying the turnover-based progressive rates of a food chain oversight fee and a healthcare contribution payable by tobacco companies until it concludes an assessment of the rate structuresʼ compatibility with EU rules on state aid. If upheld, the ban can carve an annual HUF 40 bln whole in government revenues, analysts calculate.

   Tuesdayʼs official data on quickly decelerating annual average wage growth in both the national economy and the private sector still raised questions on the future prospects of consumer demand. Average net wage in the national economy actually fell in May from the previous month, exacerbated by inflation that reappeared after eight months of deflation trough April.

   A push of the National Bank of Hungary (NBH) for the government to initiate the swap of forex car loans into forint debts still pressured OTP Bank.

   Soft Brent prices and a stronger forint compared to last week which also prohibits fuel price rises hit MOL.

   Heavily exposed to Russian markets, drugmaker Richter felt the impact from an un-corroborated news story in a pro-government daily on Wednesday which said the US Army could send Bradley fighting vehicles and M1 tanks to Hungary next year for military exercises as part of NATOʼs response to the conflict between Russia and Ukraine.

   OTP lost 0.66% to HUF 5,861 on turnover of HUF 2.25 bln from a HUF 4.58 bln session total, less than half the daily average this year.

   MOL dropped 1.66% to HUF 14,505 on turnover of HUF 1.04 bln.

   Magyar Telekom won 0.25% to HUF 404 on turnover of HUF 649m.

   Richter retreated 1.09% to HUF 4,280 on turnover of HUF 479m.

   The bourseʼs mid-cap BUMIX went out 0.19% higher at 1,683.27.

   Elsewhere in the region, WIG 20 in Warsaw was down 2.97%, while Pragueʼs PX dipped 0.10%.

Western Europeʼs major indices were all down ahead of their close on Wednesday, FTSE100 in London 1.50%, DAX30 in Frankfurt 0.68%, and CAC40 in Paris 0.45%.

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