Foiled attacks fluster markets, drop BUX to sharp decline

Analysis

The Budapest Stock Exchange's blue-chip BUX index suffered its highest decline in nearly two months on Thursday, tumbling 609.36 points after early news. British police and counter-terrorism agents had thwarted a plot to blow up passenger airplanes over the Atlantic. It prompted investors to flee stock markets throughout Europe for the customary safe havens of government bonds, gold and the Swiss franc.
The BUX recorded its largest single-session decline since June 13, losing 2.78% to 21,330.77 on a brisk turnover of FT 23.48 billion (€ 86.99million). The mid-cap BUMIX index also plunged, losing 43.26 points, or 2.78%, to 2,112.88. The BSE's four highest-cap issuers, which account for 88.79% of the BUX index's point value, stood as follows at Thursday's closing bell:
Magyar Telekom lost a BUX-listed highest 4.44% to Ft 860 on a stout turnover of Ft 1.78 billion after reporting a 10.8% year-on-year decrease, in H1 after-tax profits of Ft 36.93billion (€ 137m) in its consolidated H1 flash report. Its parent company, Deutsche Telekom exacerbated MTel's plight with the Thursday-morning release of reduced sales and earnings forecasts. The region’s biggest oil and natural gas company Mol, lost 3.32% to Ft 22,150 on a turnover of Ft 5.99 billion. OTP, Hungary’s biggest bank, lost 2.93% to Ft 5,960 on an exchange-high turnover of Ft 11.33 billion. Drug company Richter Gedeon lost 1.23% to Ft 42,000 on a turnover of Ft 2.05 billion.
These four cardinal issuers generated 90.08% of the BSE's composite Thursday turnover. None of the 12 BUX-listed issuers closed higher on Thursday, though BorsodChem managed to break even at Ft 2,845 after reporting a mixed bag of lower-than-expected Q2 net profits and higher-than-expected Q2 operating profits in its Thursday-morning H1 flash report. Neither did any of the 16 BUMIX-listed issuers finish higher on Thursday, though printing company Állami Nyomda, Győr textile company Pannonflax and veterinary drug company Phylaxia Pharma all finished at break-even.
Gergely Suppan, analyst of Takarékbank attributed losses from Magyar Telekom and Egis primarily to the companies' disappointing Thursday-morning flash reports, while ascribing those of other companies primarily to the bearish market sentiment that gripped the continent following the foiled terrorist plot. Suppan noted that flash report of Egis is showing the drug company to have realized a 61.3% year-on-year increase in consolidated after-tax profits to Ft 14.40 billion during Q1-Q3 of its business year begun on October 1, 2005 largely conformed to expectations. At the same time BorsodChem's disappointing H1 bulletin did not undermine the company's stock value due to its impending delisting from the BSE at a price of Ft 3,000 per share. The Takarékbank stock analyst surmised that Mol shares devaluated in response to the decline in oil prices on international markets, due to the prospect of reduced airline travel. (Econews)

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