BUX further up on Richter and MOL

Telco

The Budapest Stock Exchangeʼs main BUX index finished up 1.16% at 22,850,53 Wednesday, one month short of a four-year high, after rising 0.15% Tuesday. It is up 37.37% from year-end, after losing 10.40% last year.

Outperforming, Richter supported the BUX after the pharma company announced first-quarter results way above market consensus, although it confirmed its earlier guidance for a 7-8% revenue drop in euro terms this year, citing forex and Russian-Ukrainian risks that preclude "overoptimism" despite encouraging results in the first quarter.

MOL shot up late afternoon on ever rising crude prices.

Minutes of the latest, end of April, rate meeting of the National Bank of Hungary (MNB), published on Wednesday, also supported as the central bank apparently stepped up its dovish stance. After a second 15bs cut in as many month the bank said it might continue to cut its policy rate until it reaches its inflation target which is 3% annually, with a plus or minus one percentage point tolerance band that was introduced in March.

Headline deflation slowed from a peak of 1.4% annually to 0.6% in March. The price index has been negative since April last year with the exception of July and August. April inflation data is scheduled for Friday. Analystsʼ projections vary from minus 0.3% to minus 0.8%, with a consensus that zero inflation may be attainable by October only.

Still, drag on the BUX was fresh statistics showing calendar adjusted retail trade growth slowed for the third consecutive month in March, and a rewarming of the debate whether the gradual cut in the special bank levy, agreed with the European Bank for Reconstruction and Development (EBRD) and Erste Group early February, should be conditional on, or proportional to, raised lending by banks.

The renewed uncertainty pressured OTP for most of day, and capped its rise towards close, but it still scaled a new nearly four-year closing high on Tuesday.

Hungary will not legally require banks to increase their lending activity in return for a reduction of the bank levy, cabinet chief Janos Lazar said a couple of weeks ago at his regular press briefing.

But National Economy Minister Mihaly Varga stressed the connection in an interview on public radio on Wednesday, saying that "banks must feel that the reduction in the bank levy is compensation for increased lending," and whether this requires legal regulation is still a "matter of debate".

In an interview published in daily Napi Gazdaság also on Wednesday, National Bank of Hungary managing director Marton Nagy said the scale of the reduction in the bank levy ought to be tailored to each bankʼs increase in lending activity.

OTP rose 0.17% to HUF 6,065, again the highest since June 1, 2011, on turnover of HUF 4.63 bln from a HUF 12.20 bln session total, 15% above the daily average this year.

MOL gained 1,63% to HUF 15,250 on turnover of HUF 3.45 bln.

Magyar Telekom increased 0.49% to HUF 410 on turnover of HUF 412 mln.

Richter advanced 2.79% to HUF 4,600, a six-day high, on turnover of HUF 3.60 bln.

The bourseʼs mid-cap BUMIX went out 0.89% lower at 1,623.11.

Elsewhere in the region, WIG 20 in Warsaw was up 0.66%, while Pragueʼs PX dropped 0.85%. Western Europeʼs major indices were all up ahead of their close Wednesday, FTSE100 in London 0.06%, DAX30 in Frankfurt 0.20%, and CAC40 in Paris 0.14%.


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