BUX back on the slope

Ratings

The Budapest Stock Exchangeʼs main BUX index finished down 0.63% at 22,251.28 Monday, after rising 0.88% Friday. Over last week it fell 1.54% after rising 0.58% in the previous week. It is up 33.77% from year-end, after losing 10.40% last year. The Budapest parquet fell for the fifth time within six business days after a short-lived uptick on Friday.

In a day of reckoning after the upheavals of last week, sentiment was shaped by initial gloom in Western markets over oil prices that rose after Islamic State militants said they had seized the Iraqi city of Ramadi while energy sector earnings are weak, financial shares volatile on bond-yield uncertainties, Greeceʼs precarious finances call for extra caution, and and a US Fed policymaker hinted at the possibility of a rate hike this coming June against latest market consensus that pushed it out to early next year.

Local worries, including mediocre dividends, kept the BUX underwater even after euro zone peers pared losses or corrected up late afternoon.

Fresh data on slightly growing public debt suggested Hungary could wait some more until rating agencies see it fit for an upgrade from junk level where it was knocked down in late 2011.

Fitch Ratings is likely to keep Hungary’s sovereign debt rating unchanged at "BB plus" on Friday after market close, in line with Moody’s and S&P, although it may raise the outlook to "positive" from "stable", J.P. Morgan said in an analysis on Monday. Fitch itself has already said in April that an upgrade to investment level was unlikely this time.

Besides a sustained reduction in the public debt ratio and further lowering of the foreign currency share, conditions for an upgrade by Fitch include consistent, stronger GDP growth supported by greater policy stability and a gradually improved external environment.

Hungaryʼs economic outlook for this year still looks favorable but a slowdown is to set in by 1Q 2016 based on construction-sector order books, ING said in a note on Monday. Retail sales growth is partly due to a receding shadow economy in wake of the government launching online cash registers, while the GDP figure already contains estimated informal consumption. Automotive sector output, the engine of Hungaryʼs industrial growth, has increased significantly but its added-value intensity is lower than that of the other sectors. This suggests expectations for a 3.5% growth are exaggerated even this year, ING added.

OTP lost 0.34% to HUF 5,940 on turnover of HUF 2.24 bln from a HUF 5.16 bln session total, less than half the daily average this year.

MOL dropped 2.01% to HUF 14,650 on turnover of HUF 2.29 bln.

Magyar Telekom dipped 0.24% to HUF 420 on turnover of HUF 124m.

Richter advanced 0.23% to HUF 4,390 on turnover of HUF 430m.

The bourseʼs mid-cap BUMIX went out 0.05% lower at 1,608.33.

Elsewhere in the region, WIG 20 in Warsaw was up 0.20%, while Pragueʼs PX decreased by 0.36%. Western Europeʼs major indices were mixed ahead of their close Monday, with FTSE100 in London up 0.04%, DAX30 in Frankfurt up 0.95%, and CAC40 in Paris down 0.08%.



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