BUX follows eurozone peers down

Paring initial gains by mid-day, the Budapest bourse followed eurozone peers down the slope later, after mood in Western markets turned sour on news that the Greek government might collapse as the countryʼs new bailout program was voted in parliament on Friday with opposition votes, while the governing party revolted against the prime minister. Falls accelerated in the afternoon after fresh data from the Fed showed manufacturing activity in New York state plunged to its weakest level in August since 2009, slightly pushing back bets for a September US rate hike, but raising fears that the overseas tightening might prove more dangerous for the economy than previously thought.

A late recovery in most Western markets came late for the BUX to work off all its intraday loss.

In domestic news, INGʼs Hungarian economic cycle indicator, the LeadING HUBE, predicted on Monday a significant slowdown, practically a hard landing, at the end of the first half of 2016, given an additional huge drop in the Hungarian construction sector’s order book levels.

In official data of the Hungarian construction sector last week, faster annual fall in June of both new orders and work to be done suggested increasing exhaustion, with total contracted volumes declining almost 50% from a year ago after an annual fall of a little more than 40% in May, and the annual drop in new orders accelerated nearly four-fold from May.

Last Friday then, data showed economic growth slowed more than expected in both the euro area and in most of the CEE region, including Hungary, in the second quarter. Economic slowdown comes at a time when the Hungarian central bank is not in a position to renew easing, deterred by the chance of a tightening cycle widely expected to start in the US later in the year despite mixed US data.

Meanwhile, Hungaryʼs government apparently scrambles to sell state property in order the fend off a dangerous rise in budget deficit. Newspaper reports on Monday said the government wants to accelerate sales by introducing an internet-based tendering system because only one-fifth of amounts planned from such sales for this year have so far been pocketed.

BUXʼs usually largest-volume constituent, OTP Bank slid further. It posted larger than expected, two-year high, profits from the second quarter on Friday, but analystsʼ recommendations have since poured in mixed, with several of them predicting that the improvement was not sustainable on low provisioning against Russian and Ukrainian risks.

OTP added to its 3.32% loss on Friday a drop of 0.58% to HUF 5,622 on turnover of HUF 3.73 bln from a HUF 5.00 bln session total, little more than half the daily average this year.

MOL won 0.55% to HUF 14,580 on turnover of HUF 956m.

Magyar Telekom shed 0.49% to HUF 404 on turnover of HUF 41 mln.

Richter retreated 0.11% to HUF 4,440 on turnover of HUF 231 mln.

The bourseʼs mid-cap BUMIX went out 0.40% higher at 1,689.31.

Elsewhere in the region, WIG 20 in Warsaw was down 1.02%, while Pragueʼs PX got rid of 0.23%.

Western Europeʼs major indices were mixed ahead of their close on Monday, with FTSE100 in London up 0.20%, DAX30 in Frankfurt down 0.11%, and CAC40 in Paris up 0.82%.