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BUX up in very thin trade

Telco

The Budapest Stock Exchange's main BUX index finished up 0.51% at 17,281.57 Wednesday, after rising 0.63% Tuesday. It is down 6.91% from the end of last year, after it rose 2.15% in 2013. The Budapest parquet corrected up for a second day, recuperating about a third of the previous four days' loss.

A final reading confirmation of slowing, but still strong GDP growth in the second quarter, fresh data on accelerating retail trade growth in October on falling fuel prices, a final acquittal of MOL's chief in court in Budapest from corruption charges in relation to MOL's buying into its Croatian peer, INA, in 2009, an upgrade of MOL by Barclays to equal weighting from underweight with its target price increased to HUF 14,500 from HUF 13,000, and Magyar Telekom's announcement that it is testing LTE Advanced service, an upgrade on 4G, might have inspired the upturn, but extra low volumes again suggested trade was for the brave only.

Investors' worries over Hungary may increase given politics and economic policy worries, said Morgan Stanley economist Pasquale Diana on Wednesday. "We have seen an escalation in anti-EU and anti-US rhetoric, and a rapprochement with Russia. While this may be part of a bigger strategy, these factors can only increase investors' concerns," he said. In addition, recent proposed tax increases in the retail sector, combined with the well-known pressures on banks, mostly on foreign-owned banks, as well as energy companies have increased concerns among foreign investors of a 'home bias' on the part of the Hungarian authorities, Mr Diana added. Consolidation in the banking system, which is a stated goal of the government and the central bank, may introduce more uncertainty in 2015, he said.

Contributing to unease in Hungarian-US relations was a remark of Republican Senator and former US presidential candidate John McCain late Tuesday ahead of the vote that confirmed Colleen Bradley Bell as new US ambassador to Hungary, that "... here we are, a nation (Hungary) that is on the verge of ceding its sovereignty to a neo-fascist dictator getting in bed with Vladimir Putin and we are going to send the producer of 'The Bold and The Beautiful' as the ambassador."

Senator McCain put his opinion in the context of Hungary being "a nation which is very important to our national security interest."

OTP won 1.02% to HUF 3,970 on turnover of HUF 774m from a HUF 1.82 bln session total, a fifth of the daily average this year.

MOL gained 0.38% to HUF 11,840 on turnover of HUF 449 mln.

Magyar Telekom rose 0.89% to HUF 340 on turnover of HUF 103 mln.

Richter advanced 0.24% to HUF 3,788 on turnover of HUF 380 mln.

The bourse's mid-cap BUMIX went out 1.10% lower at 1,458.66.

Elsewhere in the region, Warsaw's WIG20 was down 0.04%, while Prague's PX rose 1.18%. Western Europe's major indices were mixed ahead of their close Wednesday, FTSE-100 in London down 0.36%, DAX30 in Frankfurt up 0.34%, and CAC40 in Paris up 0.06%.

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