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BUX shots up after Fed

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The Budapest Stock Exchangeʼs main BUX index finished up 2.12% at 18,915.74 Thursday, a new nine-month high, after sinking 0.58% Wednesday. It is up 13.72% from year-end, after losing 10.40% last year. Unfazed by eurozone market caution, the Budapest parquet shot up after the Fed pushed back expectations of its first rate rise in almost a decade in its statement late Wednesday.

The Budapest Stock Exchangeʼs main BUX index finished up 2.12% at 18,915.74 Thursday, a new nine-month high, after sinking 0.58% Wednesday. It is up 13.72% from year-end, after losing 10.40% last year. Unfazed by eurozone market caution, the Budapest parquet shot up after the Fed pushed back expectations of its first rate rise in almost a decade in its statement late Wednesday.

Higher U.S. rates would make the assets of Europeʼs emerging markets less attractive and the risk of a US rate hike in June caused wobbles in the regionʼs markets in the past two weeks. Wall Street consensus now sees a Fed lift-off in September as the Fed removed the word "patient" from its statement in

terms of raising interest rates, as expected, but also lowered its forecasts for the economy and inflation and for its interest rate trajectory. That signaled a more gradual path to policy normalisation than many investors had foreseen.

Locally, expectations for a larger than expected rate cut by the National Bank of Hungary (MNB) next weak, combined with improving forecasts for Hungaryʼs economic growth this year, also propped up shares.

A Reuters poll of analysts on Thursday varied between a base rate cut to 2% to 1.8% from the present 2.1% with no one expecting a hold decision.

Danske Bank now expects Hungaryʼs economy to growth 3.3% this year. After years of stagnation, it is becoming one of the fastest growth economies in the CEE region, the house said in a note on Thursday, adding that structural problems such as continued high political risk and very unorthodox

economic policy, as well as weak domestic demand, continue to weigh. Hungaryʼs government projects 2.5% GDP growth this year after 3.6% last year, but the National Economy Ministry said on Thursday they might modify the official outlook upward.

Exposed to Russian markets, Hungarian blue chips rose also on a marked strengthening of the Russian rouble against the Hungarian currency.

OTP, which has large business in Russia and Ukraine, skyrocketed after JP

Morgan raised its price target to HUF 6,950 forints by end-2016 on better than expected economic outlook in Hungary, and due to hopes that Western powers may ease sanctions on Russia, traders said.

MOL was helped by the resumption of production in Iraqi Kurdistan as announced by its partner there, Gulf Keystone Petroleum, after a payment dispute with local authorities has been resolved. MOL also confirmed its crude production target of 170,000-180,000 barrels per day by 2018, from around 104,000 now, and said it eyed new acquisition targets in the North Sea, Russia and Pakistan.

OTP surged 4.37% to HUF 4,871 on turnover of HUF 9.59 bln from a HUF 11.13 bln session total, about a third above of the daily average this year.

MOL rose 0.34% to HUF 11,840 on turnover of HUF 644 mln.

Magyar Telekom improved 1.04% to HUF 387 on turnover of HUF 375 mln.

Richter advanced 1.73% to HUF 3,891 on turnover of HUF 439 mln.

The bourseʼs mid-cap BUMIX went out 0.28% higher at 1,519.08.

Elsewhere in the region, WIG 20 in Warsaw was up 1.72%, while Pragueʼs PX garnered 1.13%. Western Europeʼs major indices were mixed ahead of their close Thursday with FTSE-100 in London up 0.22%, DAX30 in Frankfurt down 0.14%, and CAC40 in Paris down 0.05%.

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