BUX underperforms

MNB

The Budapest Stock Exchangeʼs main BUX index finished up 0.05% at 18,674.97 Monday after falling 0.63% Friday. It is up 12.27% from year-end, after losing 10.40% last year. Over last week the BUX added 2.09% after a plus of 0.40% in the previous week.

While euro zone indices soared, the Budapest parquet lagged after Fridayʼs retreat from a near nine-month high reached by Thursday last week.

Dealers said turnover in regional markets could remain subdued and more volatility may come ahead of the Fedʼs Wednesday statement which analysts give almost an equal chance to point to a rate hike in June or later.

Local mood remained lukewarm after last week ended with two consecutive blows from the European Commission on projects close to the heart of Hungaryʼs government. On Friday, the EC confirmed Brussels had objections to Hungaryʼs plan to import fuel exclusively from Russia to the Paks (central Hungary) nuclear power plant after its expansion. Earlier, on Thursday, the European Union ordered Hungary to stop applying a special advertising tax pending its n investigation. This raised concerns that the government might invent some other taxes to fill a possible gap.

As announced in February, the National Bank of Hungary (MNB) began its third Funding for Growth Scheme, called FGS Plus, on Monday with HUF 500 bln available, but this kind of targeted liquidity enhancement failed to invigorate the marketplace as it does not live up to expectations. The new bank loan refinancing programme again applies only to SMEs with the added enticement of MNB assuming some of the credit risk as opposed to the first two programmes where it does not, but the programme was not extended to large firms as expected earlier in the wake of hints by MNB officials.

All Funding for Growth programmes will run out at the end of this year, the MNB confirmed, because from the beginning of 2016 SME sending "can gradually return to restored market-based conditions".

From the first FGS which ran from June to September, 2013, with HUF 750 bln available HUF 701 bln were disbursed, and from the second FGS running from October, 2013, to the end of this year with a total possible availability of HUF 2,000 bln, only HUF 491 bln have so far been disbursed, while market-based lending is still stagnating, analysts add.

Fresh construction statistics on Monday came in with a mixed message. Volumes rose annually in January after a fall in December, but the January pace was much slower than the annual average last year, and also trailed the annual growth figure of January 2014 and the 2013 average. New orders and work to be done were down about a quarter from a year earlier as public orders faded, suggesting the volumes slowdown should continue.

OTP eased 0.11% to HUF 4,695 on turnover of HUF 1.97 bln from a HUF 3.74 bln session total, almost two-thirds short of the daily average this year.

MOL fell 0.46% to HUF 11,910 on turnover of HUF 889 mln.

Magyar Telekom rose 2.36% to HUF 390 on turnover of HUF 241 mln.

Richter slid 0.36% to HUF 3,845 on turnover of HUF 537 mln.

The bourseʼs mid-cap BUMIX went out 0.32% higher at 1,514.86.

Elsewhere in the region, WIG 20 in Warsaw was up 0.53%, while Pragueʼs PX increased 0.01%. Western Europeʼs major indices were all up ahead of their close Monday, FTSE-100 in London 0.91%, DAX30 in Frankfurt 2.62%, and CAC40 in Paris 1.21%.

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