Report: Central bank to sell stake in Budapest bourse in five years

Parliament

Image by Jessica Fejos

The National Bank of Hungary (MNB) will start to divest its stake in the Budapest Stock Exchange (BSE) within five years, BSE CEO Richárd Végh said yesterday at the Reuters Eastern Europe Investment Summit at Reutersʼ office in Budapest, according to Hungarian news agency MTI.

Végh, said “it is a reality for sure” that the bank would at least start divesting within five years after bourse reforms and some big initial public offerings”. Asked whether the bank would sell all or part of its 76% stake, he said “I cannot tell you that precisely.”

Végh said he wanted to see the number of companies in the MSCI Hungary index increase to at least five within five years. Currently three companies account for 85% of the Hungarian stock marketʼs capitalization, according to index compiler MSCI, and they make up the MSCI Hungary Index.

“Three companies are listed in the MSCI Hungary index now. The minimum goal in five years is five, but preferably more. With five to eight really liquid blue chips our market cap and daily turnover would grow substantially, with an SME section on the side with slightly different investors,” Végh said.

“The most competitive Hungarian companies include publicly traded corporations that were once state-owned, such as MOL or Richter. There are several state-owned companies that could follow them. There are a handful of issues that such companies need to work out. With a more straightforward business model many of these companies could be ready for an IPO in a fairly short time.”

MKB Bank said it would list on the bourse within three years and Budapest Bank is also entertaining the idea of an IPO, Végh said. Asked whether Hungarian-founded but London-listed Wizz Air, could list in Budapest as well, he said “We would support that fully. Wizz Air could benefit from a cross listing, reaching investors they canʼt access in London, especially via Hungarian indices or emerging market indices.”

Végh said turnover on the BSE could grow substantially. Only 1.7% of household financial wealth in Hungary is invested in stocks, that could be doubled or tripled easily, as local investors seize upon new listings, newly proposed tax incentives and planned new investment vehicles such as venture capital trusts, MTI reported.

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