BUX up again on Greece, Putin

MNB

The Budapest Stock Exchange's main BUX index finished up 0.94% at 18,082.27 Wednesday, about a point short of a more than five-month high after climbing 0.24% Tuesday. It is up 8.71% from year-end, after losing 10.40% last year.

The Budapest parquet rose for a second day on improved global mood as speculation strengthened that a resolution of Greece's tug-of-war with its eurozone partners on the country's debt future is possible by the end of the week.

Investors were also relieved by news that Ukrainian government forces were leaving a disputed area in the east, enhancing the chance of a three-day ceasefire to hold. Consequently, the Russian rouble gained on the interbank market in the wake of a strongly received Russian debt issue, which improves the outlook for Hungarian blue chips exposed to Russian markets.

Richter and MOL were also boosted -- followed by some profit taking from MOL towards close -- by Russian president Vladimir Putin who specially highlighted both as companies with activities in Russia that his government was ready to support at his late Tuesday press briefing in Budapest.

However, except for Richter, the market was subdued from early in the morning as another Funding for Growth Scheme (FGS) of the National Bank of Hungary (MNB) unveiled on Wednesday with HUF 500 bln available did not live up to expectations. The third in a row, the new bank loan refinancing program again applies only to SMEs with the added enticement of MNB assuming some of the credit risk as opposed to the first two programs where it does not, but the program was not extended to large firms as expected in the wake of earlier hints by MNB officials.

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

Analysts add that the 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 availability of HUF 2,000 bln, only HUF 484 bln have so far been disbursed, while market-based lending is still stagnating.

Therefore, market players doubted the forecast of the MNB's governor on Wednesday that the new program could boost Hungary's GDP growth to the same, 3.5% rate, as registered last year from the government's forecast of 2.5% while some independent forecasters still pencil in growth even under 2%.

A hint of the MNB's deputy governor also on Wednesday that the central bank may engage in buying securities in the future contributed to the Hungarian currency's drift in the morning, but did not move the share market.

In other negatives for the day, it was reported that legislation allowing banks to charge negative interest on companies forex deposits was in final stages in parliament, and that the governing FIDESZ party prepared a parliamentary resolution to ask the government to withdraw certain subsidies from companies which do not pass on lower fuel costs to consumers, in spite of an announcement of the National Economy Ministry Tuesday that said it had no intention to intervene in market prices.

OTP won 0.28% to HUF 4,305 on turnover of HUF 4.43 bln from a HUF 8.29 bln session total, 3% short of the daily average this year.

MOL lost 0.42% to HUF 11,750 on turnover of HUF 1.55 bln.

Magyar Telekom fell 0.53% to HUF 372 on turnover of HUF 65 mln.

Richter surged 4.37% to HUF 3,945 on turnover of HUF 1.89 bln.

The bourse's mid-cap BUMIX went out 0.14% higher at 1,508.65.

Elsewhere in the region, the WIG 20 in Warsaw was down 0.56%, while Prague's PX sank 0.09%. Western Europe's major indices were mixed ahead of their close Wednesday, FTSE-100 in London down 0.11%, DAX30 in Frankfurt up 0.48%, and CAC40 in Paris up 0.90%.

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