BUX snaps six-day rally

Telco

The Budapest Stock Exchangeʼs main BUX index finished down 0.56% at 21,905.14 Tuesday after rising 0.40% Monday. It is up 31.69% from year-end, after losing 10.40% last year.

The Budapest bourse followed down global markets that snapped their longest winning streak since February after Chinaʼs imports fall continued for an eleventh month in September, and steepened way beyond expectations, giving a further sign one of the worldʼs economic growth engines is sputtering.

The resulting morning plunge in oil prices that deepened on an IEA forecast on the oil glut to continue next year, also weighed on related shares worldwide, making oil company MOL loser of the day, despite Brent correcting a bit up late in the afternoon.

Hungary’s central bank will announce new measures, including "unconventional" steps, in mid-November to boost lending, National Bank of Hungary (MNB) Vice President Marton Nagy told reporters during a conference in Vienna on Tuesday, and reiterated the authorities still wanted to make the decrease of the special bank levy, already approved by parliament with next yearʼs budget, conditional on corporate loan growth in a give-and-take deal.

Hungaryʼs government in February signed a memorandum of understanding with the European Bank for Reconstruction and Development (EBRD) in which it promised to cut the levy with no strings attached, and committed itself to "refrain from implementing new laws or measures that may have a negative impact on the profitability of the banking sector."

"We want to maintain this agreement. But you can ... somewhat change the agreement in the direction we are asking for ... in order to really make the agreement more balanced, which means you give something and the other also gives something," Nagy said, sending OTP Bank shares down the slope from a two-month high on Monday.

Corporate loan volume in Hungary fell to about 25% of GDP by the second quarter of this year from almost 40% in early 2010, just before the advent of the present government. Banks complain of scarce creditworthy corporate loan demand amid unpromising household consumption growth in the stubbornly low-income economy.

In a presentation also at the Vienna conference the regional director of Standard & Poorʼs, Marcin Petrykowski, said that beside GDP-growth data the per-capita GDP, the quality of the fiscal and monetary policy, the strength of the institutions, the predictability of the economic policy are also important factors in deciding on the credit rating of a country, and in these respects Hungary lags many countries in the region.

Global rating agencies have affirmed Hungaryʼs junk rating this year despite urging from the government for an upgrade it thinks is long overdue.

Safe haven drugmaker Richter lured back some investors in final trades.

OTP lost 0.73% to HUF 5,708 on turnover of HUF 3.66 bln from a preliminary HUF 6.57 bln session total, a quarter short of the daily average this year.

MOL fell 1.12% to HUF 13,195 on turnover of HUF 1.54 bln.

Magyar Telekom dropped 0.75% to 396 HUF on turnover of HUF 149 mln.

Richter advanced 0.22% to HUF 4,590 on turnover of HUF 1.19 bln.

The bourseʼs mid-cap BUMIX went out 0.05% higher at 1,613.76.

Elsewhere in the region, WIG 20 in Warsaw was down 0.66%, while Pragueʼs PX shed 1.36%.

Western Europeʼs major indices were all down ahead of their close on Tuesday, FTSE100 in London 0.23%, DAX30 in Frankfurt 0.65%, and CAC40 in Paris 0.81%.

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