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BUX snaps losing streak

Telco

The Budapest Stock Exchangeʼs main BUX index finished up 0.88% at 22,393.01 Friday, after losing 0.88% Thursday. It is up 34.62% from year-end, after losing 10.40% last year.

Snapping a four-day losing streak, the Budapest parquet belatedly followed euro zone peers up, only paring gains in the afternoon when the latter turned around and fell on dismal US industrial and consumer sentiment data.

New-found calm in sovereign bond markets with falling yields also helped after several weeks of turmoil ratcheted yields up in fear that the ECB might cut short its QE. But first-quarter euro zone GDP data out Wednesday, termed "good, but not too good" by analysts, helped dispel anxiety.

Winner of the day was MOL on announcing that it will widen ranges at its filling-station shops to raise revenue after legislation mandated supermarkets to close on Sundays.

Despite posting steeply falling net income in the first quarter, Hungary’s largest bank by assets, OTP, also rose as results confounded market consensus for a loss, because lower risk costs and operating expenses offset falling revenues in its home market and crisis-torn Russia and Ukraine.

OTP dropped earlier guidance that it would reverse losses at its Ukrainian unit this year, but saw an uptick in its Hungarian business despite taking s big hit from Hungarian government schemes including the special bank levy, mandatory client compensation for past practices and the conversion of forex household mortgages into forint dent, and registering a 9% and 12% falls in retail and corporate lending stock to HUF 4,507.5 bln and HUF 1,877.0 bln, respectively, while client deposits rose 10% to HUF 7,567.5 bln.

However, the conversion of foreign-currency mortgages to forint in Hungary also has a “very significant” positive impact on bad loans, the bank said.

And Hungaryʼs plan to keep cutting its bank-sector tax beyond 2016 will bring much-needed relief to the banking sector, and will also be viewed positively by credit rating firms, Commerzbank said in a note on Friday. An upgrading of Hungaryʼs sovereign risk was also implied by an analysis on Thursday from JP Morgan, highlighting the diminished external vulnerability of Hungary as a result, among others, of the forex loan conversion.

OTP won 0.68% to HUF 5,960 on turnover of HUF 2.82 bln from a HUF 6.92 bln session total, two-thirds of the daily average this year.

MOL gained 1.63% to HUF 14,950 on turnover of HUF 1.94 bln.

Magyar Telekom rose 0.48% to HUF 421 on turnover of HUF 432m.

Richter advanced 0.69% to HUF 4,380 on turnover of HUF 1.05 bln.

The bourseʼs mid-cap BUMIX went out 0.02% higher 1,609.19

Over the week, the BUX was down 1.54% after rising 0.58% in the previous week.

OTP raked up 0.17% after dropping 0.92% last week. It hugely outperforms the market with a 56.39% gain year-to-date.

MOL lost 2.61% after improving 1.99% the previous week.

Magyar Telekom increased 0.72% after rising 3.21% last week. It is back in vogue on planned tariff rises from July 1st, and on possible telecommunications tax deferrals announced by the government on Thursday.

Richter shed 3.84% after easing 0.13% over the previous week, exposed to the Russian ruble that resumed weakening this week.

The BUMIX was down 1.52% after pocketing 1.32% over last week.

Elsewhere in the region, WIG 20 in Warsaw was up 0.05%, while Pragueʼs PX rose 0.07%. Western Europeʼs major indices were all down ahead of their close Friday, FTSE100 in London 0.10%, DAX30 in Frankfurt 0.96%, and CAC40 in Paris 0.59%.

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