BUX further down with OTP suspended

The Budapest parquet, followed European peers, smitten by a Wednesday evening hawkish US Fed guidance, down in thin volumes in absence of OTP Bank which was suspended for the day because of an auction sale of 5% of its shares held by the government until now.

Analysts said a textbook scenario could see OTP falling Friday morning, but strengthening is equally possible, because there are about 8 million open short positions in the market, and if the auction is used to close those positions, then demand could increase going forward.

Other domestic news of the day that could have pressured the BUX included statements of Hungaryʼs cabinet chief on the probable use of proceeds from the OTP sale for "developments and investments", and on the governmentʼs intention to re-start utility price cuts. Both suggested to analysts that the government aims at squeezing out the last remnants of foreign ownership in the utilities sector, even at the price of further tension with the European Commission, and prospective domestic political risk involved with the government becoming the national service provider.

Non-performing household loansʼ proportion to total outstanding fell from nearly 20% at the end of Q4 last year nearer to 15% by the end of Q1 this year as a result of mandatory refunds to clients by banks for past practices and the conversion of forex mortgages into forint, but the proportion grew to more than 16% by the end of Q2, and with an amount of around HUF 1,100 bln is exorbitant, a survey published by the National Bank of Hungary (MNB) on Thursday showed. Analysts surmised that, with the publication of the survey, the central bank was paving the way for further ideas to save debtors. Earlier measures deeply cut banksʼ profits while brought only temporary relief to distressed debtors, analysts recall.

According to a second reading of official data on Thursday, retail trade fell in August compared to July in Hungary, and annual retail trade growth sharply slowed for a second month in absolute terms, even steeper than the first reading showed, and also decelerated in calendar-adjusted terms, lagging the year-to-date average growth as well.

Unquoted on Thursday, OTP lost 1.25% to HUF 5,670 on Wednesday.

On Thursday, MOL fell 1.66% to HUF 12,775 on turnover of HUF 1.47 bln from a preliminary HUF 3.70 bln session total, two-fifths of the daily average this year.

Magyar Telekom rose 0.78% to HUF 390 on turnover of HUF 740 mln. 

Richter retreated 0.68% to HUF 4,844 on turnover of HUF 1.43 bln.

The bourseʼs mid-cap BUMIX went out 0.21% lower at 1,593.79.

Elsewhere in the region, WIG 20 in Warsaw was down 2.30%, while Pragueʼs PX shed 0.19%.

Western Europeʼs major indices were all down ahead of their close on Thursday, FTSE100 in London 0.99%, DAX30 in Frankfurt 0.66%, and CAC40 in Paris 0.51%.