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BUX up against all odds

Telco

The Budapest Stock Exchangeʼs main BUX index finished up 0.95% at 21,306.51 Thursday after rising 0.74% Wednesday. It is up 28.09% from year-end, after losing 10.40% last year.

An unlikely contender for world championship in terms of year-to-date rises, the Budapest bourse again surprised Thursday afternoon with a quick return to the black against all odds.

Previously, it docilely followed European peers downward as global anxieties for Asiaʼs economic pull resurfaced on dismal Chinese producer deflation numbers, and core machine orders unexpectedly narrowing in Japan.

But later, fewer U.S. weekly jobless claims and other data on deepening import price deflation in the Unite States, suggesting headline inflation should remain tepid, added up to a benevolent mix of confidence in the strength of the U.S. economy on the one hand, and renewed hopes for a postponement of the U.S. rate hike next week, on the other.

This led to an optimistic New York open, which, in turn, helped euro zone indices pare losses, and the BUX gained on perceptions that the CEE region is better protected from Asian headwinds than the euro zone with much stronger commercial and investments ties to the Far East.

However, recent domestic data suggesting economic slowdown in Hungary, another rail traffic collapse at the Austrian border on the account of refugee congestion, possibly damaging foreign trade and tourism, and news Hungaryʼs government was pondering the declaration of a "state of crisis due to mass migration" as of September 15, still limited market sentiment in Budapest. Persistently low volumes also signaled underlying caution.

Russian financial group VTB projected for OTP Bank profits 26%, 16% and 15% smaller than previously seen for 2015, 2016 and 2017, respectively, in a note on Thursday, on fewer revenue and wider provisioning. VTBʼs present target price for OTP is HUF 5,200 and recommends "sell".

Magyar Telekom fell as an exception on news that a fourth, state-owned, mobile phone service was up and coming.

OTP won 0.91% to HUF 5,519 on turnover of HUF 2.63 bln from a HUF 5.52 bln session total, more than a third short of the daily average this year.

MOL rose 1.38% to HUF 13,575 on turnover of HUF 1.20 bln.

Magyar Telekom dropped 0.26% to HUF 389 on turnover of HUF 151 mln.

Richter advanced 1.33% to HUF 4,195 on turnover of HUF 1.51 bln.

The bourseʼs mid-cap BUMIX went out 0.37% lower at 1,627.61.

Elsewhere in the region, WIG 20 in Warsaw was up 1.98%, while Pragueʼs PX fell 0.58%.

Western Europeʼs major indices were all down ahead of their close on Thursday, FTSE100 in London 1.05%, DAX30 in Frankfurt 0.81%, and CAC40 in Paris 1.40%.

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