BUX underperforms European peers

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The Budapest Stock Exchangeʼs main BUX index finished down 2.95% at 23,179.43 Monday, after falling 1.65% Friday. It is down 3.10% from year-end, after surging 43.81% last year.

While euro zone indices fared mixed after falling on Friday to the lowest since December, 2014, the Budapest parquet accelerated an aggressive negative repricing after huge wins last year.

Cheap oil is a bonus for Hungaryʼs economy as a whole, but possible repercussions in terms of inflation that could slow again after some acceleration in December, led to second thoughts.

Analysts expect the National Bank of Hungary (MNB) to restart easing soon, but the MNB itself refrained from communicating a reinforced easing bias in recent weeks. With falling inflation or, maybe, deflation returning, real interest rated should become even more negative, making it difficult for banks to increase lending, after they have been hit by a heavy fine last week for alleged cartel activities.

Unease is also felt as European authorities seem to turn tough on Poland after its new government has copied some unorthodox and illiberal policies from the Hungarian governmentʼs book, and Standard & Poorʼs unexpectedly downgraded Polandʼs debt on Friday.

Meanwhile, the market dearly lacks the flow of new money printed by the Fed until end-2014, and the quantitative easing of the European Central Bank (ECB) started last spring seems to be way not enough to prop up either euro zone or emerging Europe markets as it did despite similar economic odds after chairman Mario Draghi has introduced his "whatever it takes" slogan in 2012.

Morgan Sachs on Monday raised its recommendation for drugmaker Richter to "neutral" from "sell", but this did not help.

OTP lost 3.15% to HUF 5,900 on turnover of HUF 5.35 bln from a preliminary HUF 10.95 bln session total, 5% above the daily average of the last 52 weeks.

MOL fell 2.94% to HUF 13,200 on turnover of HUF 1.27b.

Magyar Telekom eased 0.75% to HUF 397 on turnover of HUF 351m.

Richter retreated 3.83% to HUF 5,400 on turnover of HUF 3.91 bln.

The bourseʼs mid-cap BUMIX went out 0.70% lower at 1,643.21.

Elsewhere in the region, WIG 20 in Warsaw was down 3.19%, while Pragueʼs PX shed 1.51%.

Western Europeʼs major indices were mixed ahead of their close on Monday, with FTSE100 in London down 0.22%, DAX30 in Frankfurt up 0.23%, and CAC40 in Paris down 0.08%.

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