BUX slows down


The Budapest Stock Exchangeʼs main BUX index finished up 0.24% at 21,955.29 Wednesday after rising 1.20% Tuesday. It is up 31.99% from year-end, after losing 10.40% last year. While European markets performed mixed, the Budapest parquetʼs main index hovered around breakeven for most of day after two days of steep rises.

An upbeat analysis of Moodyʼs on regional outlook in the CEE countries helped, but local reality kept most share prices on leash, except Richter which continued up on the apparently unstoppable rise of the Russian rouble against the Hungarian forint, new export and cooperation opportunities further to the East in Central Asia, and the personal income tax cut next year announced by the government on Tuesday.

Magyar Telecom also showed some resilience after a 4.76% dive on Tuesday, the day when the government also crushed hopes for a simultaneous cut in the corporate tax and the hefty windfall tax on the telecom sector.

It confirmed, however, the planned cut in the special bank tax.

MOLʼs investors were disturbed by news that the European Union filed antitrust charges against Russian gas giant Gazprom, accusing it of hindering competition and charging unfair prices in the natural-gas markets of Central and Eastern Europe.

Tescoʼs publication of sales in Hungary in the companyʼs financial year ended with February, however, sent a dismal message to those hoping household demand should soar and save Hungaryʼs economy. Including VAT and exchange rate changes, total revenue of Tesco fell 8.3% from the previous year, also exacerbated by shop wound-ups. "Recent legislative changes in Hungary, including mandated store closures on Sundays and, in particular, the introduction of a ‘food supervision fee’ from 1 January 2015, will have a material impact to ongoing market profitability," Tesco added.

Hopes for a spectacular consumption rise were also dented by calculations of economic portal Portfolio which showed that a typical household forex mortgage debtorʼs monthly repayments would be only halfway between the present high instalments and the much lower original ones before the crisis -- still 30% above the original repayment obligation -- even after the mandatory turning of forex household loans into forint debt which is underway in Hungary.

And ongoing weakness of market based business lending was underlined by a measure of the National Bank of Hungary (MNB) on Wednesday, when the bank extended the deadline on its running Funding for Growth Schemes designed for SMEs by one year to the end of 2016. It also widened their scope to building "green" residential homes, and, to make banks more willing to participate, allowed them to collect guarantee fees above the mandatory 2.5% effective APR, making the preferential loans with zero rate MNB refinancing more costly to some clients.

The MNBʼs first, HUF 750 bln Funding for Growth Scheme (FGS), which ran from June to September, 2013, was almost entirely taken up as it could be used also for the redemption of forex debt. But of the total available HUF 2,000 bln of the FGS Two which started in October, and can be used almost exclusively for new investments only, a mere HUF 660 bln have so far been contracted, and the total outstanding stock was 512.5 bln by the start of this month, according to MNB figures.

A top-up fund, FGS Plus, with HUF 500 bln available with partial guarantees of the central bank, was added by the MNB a month ago, with first results expected to be published in May.

OTP gained 0.88% to HUF 5,838 on turnover of HUF 5.34 bln from a HUF 10.00 bln session total, almost in line with the daily average this year.

MOL lost 2.08% to HUF 14,600 on turnover of HUF 2.18 bln.

Magyar Telekom rose 1.25% to HUF 405 on turnover of HUF 785m.

Richter advanced 1.47% to HUF 4,340 on turnover of HUF 1.60 bln.

The bourseʼs mid-cap BUMIX went out 1.00% higher at 1,607.02.

Elsewhere in the region, WIG 20 in Warsaw was up 0.49%, while Pragueʼs PX dropped 1.33%. Western Europeʼs major indices were mixed ahead of their close Wednesday, with FTSE-100 in London down 0.45%, DAX30 in Frankfurt down 0.37%, and CAC40 in Paris up 0.33%

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