BUX further down in low volumes

Telco

The Budapest Stock Exchangeʼs main BUX index finished down 1.62% at 21,400.72 Tuesday after falling 0.55% Monday. It is up 28.66% from year-end, after losing 10.40% last year.

In line with euro area peers, the Budapest parquet dipped further yesterday.

Ahead of another euro zone summit in the evening on Greece termed as "last chance" just like innumerable previous ones, investors kept on the sidelines.

Analysts agree that Greeceʼs mostly state and institutional creditors can digest a Greek non-payment without a hiccup as far as their financial stability and credit ratings are concerned, most probably even member statesʼ guarantees for the euro zoneʼs bailout fund (EFSF) should not be called if its Greek loans, making the bulk of international loans given to Greece in the last three year, fail to perform, while Greece faces quick bankruptcy without outside financing. In the present situation, therefore, the factor pressuring markets is less the fear of contagion, rather something markets simply hate: on-going uncertainty.

On the local turf, contributing to uneasiness were the Hungarian governmentʼs two new challenges to EU recommendations, one with the adoption of an anti-migrant law and construction of a fence along the border with Serbia, and another with the rejection to modify the land law which restricts foreigners access to land purchase, despite an EU infringement procedure in the matter.

Fresh data out Tuesday were of no help either.

Annual industrial output growth slowed steeply for a second month in May, with the pace reduced to about a tenth of that in March, and fell from the previous month also for a second month.

This topped statistics at the weekend that showed annual retail trade volume growth hardly accelerated in May from April, with the pace remaining deep below figures earlier in the year. Fuel and food trade growth slowed sharply, signaling the restart of inflation, depreciation of the Hungarian currency, and the mandatory Sunday closure of shops since the middle of March, analysts say.

The market expects inflation to have accelerated in June to an annual 0.6% from 0.5% in May, after eight months of deflation. Data is scheduled for Wednesday.

A survey out Tuesday of GfK Hungariaʼs, showing consumer confidence slightly rose in the second quarter from the first quarter also suggested consumers attempt to preempt inflation. About 60% of the sample expect prices to rise in the coming twelve months, putting the increase at 5% on average, and 46% of households expect inflation to outpace wage growth, while the rate of those thinking unemployment will decline fell.

OTP lost 0.82% to HUF 5,465 on turnover of HUF 2.87 bln from a HUF 5.91 bln session total, less than two-thirds of the daily average this year.

MOL fell 2.26% to HUF 14,270 on turnover of HUF 1.29 bln.

Magyar Telekom dropped 0.50% to HUF 397 on turnover of HUF 327m.

Richter retreated 2.88% to HUF 4,045 on turnover of HUF 1.02 bln.

The bourseʼs mid-cap BUMIX went out 0.31% lower at 1,637.02.

Elsewhere in the region, WIG 20 in Warsaw was down 2.35%, while Pragueʼs PX sank 1.33%.

Western Europeʼs major indices closed also down yesterday, FTSE100 in London 1.58%, DAX30 in Frankfurt 1.96%, and CAC40 in Paris 2.27%.

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