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BUX opens up 0.2%, market awaits central bank rate decision

The Budapest Stock Exchange’s main BUX index opened up 0.22% at 16,855.71 on Tuesday.

OTP Bank fell 0.65% to HUF 3,05, oil and gas company MOL gained 0.53% to HUF 17,900, drug maker Richter rose 0.31% to HUF 34,50 and Magyar Telekom rose 0.61% to HUF 491.

The views of analysts interviewed by MTI varied whether Monday’s rise will continue on the bourse. They agreed, however, that the central bank’s rate decision, due at 2pm, could influence what direction stock prices would take.

Analysts expect a rate rise, with 50bp tipped as the most likely outcome, after Moody’s downgraded Hungary’s sovereign rating to the non-investment category late Thursday.

Istvan Kralik of KBC expected some downward correction or stagnation. Rumours that the banking association could suspend talks with the government after the latter extended the scope for early repayments last week are bad news for OTP, he said.

Erste stock analysts Gergely Gabler, in contrast, expected a more moderate but continued rise in Budapest on Tuesday, citing positive sentiment on global markets after President Obama said the U.S. is ready to help Europe. Even Fitch’s step to worsen the outlook of the debt rating of the U.S. failed to ruin the general optimism, he said.

He said the rumours of the banks-government talks lack details therefore will not any significantly affect OTP. A failure of the talks, however, could adversely affect the share.

Accordingly, trading on the BSE should also be influenced by the positive mood, and hopefully buyers will return to Budapest before the end of the year, he added.

The BUX closed up 2.21% at 16,817.87 on Monday, on turnover of HUF 10.7bn.