BUX up on relatively mild borrowers relief

Despite euro zone markets falling on Chinese and global emerging economic woes while waiting for the publication of the Fedʼs latest minutes later in the evening, fearing a nearside U.S. rate hike that could make things even worse, the Budapest bourse closed before a national holiday with a slight upturn on oil company MOL recovering most of its loss on Tuesday, and a second, relatively mild, borrowers relief programme posted by the government which propped up OTP Bank.

The Budapest bourse will open next on Monday, August 24.

Hungaryʼs government has decided after talks with local banks to convert outstanding forex car and consumer loans worth about HUF 305 bln into forints, the economy minister told a news conference on Wednesday. The sum is relatively small compared to a nearly HUF 3,000 bln of forex household mortgages that were converted into forint debts earlier this year. The latest measure, to be submitted to parliament next month, would cut the stock of forex retail loans to just 3% from 54% before the conversions started.

Borrowers would now get rebates worth some HUF 31 bln to compensate them for some of the exchange rate weakening, and the relief will be shouldered equally by the government and lenders, who will be allowed to reduce their 2016 and 2017 tax bills by a corresponding amount.

The maneuver is quite lender-friendly if compared to the spring conversion of forex mortgages and client refunds for past practices deemed unfair by retroactive legislation that cost banks about HUF 1 trillion. The change in the governmentʼs approach reflects a commitment it made to EBRD in February to refrain from implementing new laws or measures that could hurt profitability of the banking sector, analysts add.

Meanwhile, Raiffeisen International said that from among its remaining 82 branches in Hungary it would close 15 by September, and would cut headcount as well.

According to official figures published on Wednesday, annual nominal wage growth in Hungary both over the national economy and in the private sector without fostered workers accelerated in June due to base effect, but in monthly comparison, wages narrowed for a second month, another warning sign on consumer demand at a time when inflation is projected to accelerate. The number of people on payroll in the total economy and in the private sector slightly grew in June compared to May, and annual growth also accelerated, but remained under the year-to-date average.

OTP won 0.63% to HUF 5,635 on turnover of HUF 3.32 bln from a HUF 5.39 bln session total, more than a third short the daily average this year. (9,291)

MOL corrected up 1.68% from a dive of 2.23% Tuesday to HUF 14,495 on turnover of HUF 936 mln.

Magyar Telekom dropped 0.75% to HUF 397 on turnover of HUF 409 mln.

Richter retreated 0.14% to HUF 4,355 on turnover of HUF 686 mln.

The bourseʼs mid-cap BUMIX went out 0.33% lower at 1,687.70.

Elsewhere in the region, WIG 20 in Warsaw was up 0.91%, while Pragueʼs PX let go 0.10%.

Western Europeʼs major indices were all down ahead of their close on Wednesday, FTSE100 in London 1.64%, DAX30 in Frankfurt 2.06%, and CAC40 in Paris 1.62%.