BUX down in week-end caution

Telco

The Budapest Stock Exchangeʼs main BUX index finished down 0.48% at 23,712.67 Friday after rising 0.92% to a fourth nearly four-and-a-half-year high within a week on Thursday. It is up 42.56% from year-end, after losing 10.40% last year.

The BUX slightly underperformed European peers while European equities also stepped back from Thursdayʼs a three-month high on miners stung by deteriorating industrial profits data from China.

Fitch Ratings said in a research note that the operating environment for banks in Hungary has improved due to positive developments in the economy and the governmentʼs intention to facilitate a gradual normalisation of the banking business environment, but this was counterbalanced by fresh statistics from the National Bank of Hungary (MNB) which showed banks had only a combined HUF 1.3 bln after-tax profit in the third quarter, out of a total of HUF 141.3 bln in the first three quarters, although the latter was a turnaround from a combined loss of HUF 337.7 bln in the first three quarters of last year.

The disappointing quarterly plunge in the third quarter was caused by provisioning issues, a 12% annual decline in net interest income and a 4% dip in net fees and commissions, related to a 7% annual drop of loan stocks and narrowing interest rate spreads, not mitigated by stagnating operating costs.

The statistics implicitly confirmed the dire straits of corporate financing in Hungary.

Other data of the day showed Hungaryʼs three-month rolling unemployment rate stagnated at 6.4% in August-October.

Meanwhile, there is still no agreement in sight on the minimal wage for next year as employers offer a 3% raise, but trade unions want 9%, the partners told MTI on Friday.

Reports that on account of Hungaryʼs record in the refugee crisis the European Commission was scrutinizing in its "college" capacity the possibility of applying Article 7 of the EU Treaty against Hungary, which allows for the suspension of voting rights of a member state that seriously and persistently breaches EU values, may have also weighed on market sentiment, especially after Hungaryʼs foreign minister said that if true, such action would be "a vengeance by Brussels".

OTP lost 1.17% to HUF 6,010 on turnover of HUF 2.44 bln from a preliminary HUF 5.39 bln session total, two-fifths short of the daily average this year.

MOL fell 0.80% to HUF 13,700 on turnover of HUF 696m.

Magyar Telekom slid 0.25% to HUF 407 on turnover of HUF 114m.

Richter advanced 0.40% to HUF 5,507 on turnover of HUF 2.07 bln. 

The bourseʼs mid-cap BUMIX went out 0.43% higher at 1,635.45.

Over the week, the BUX improved 2.54% after rising 3.27% in the previous week.

OTP added 1.78% after soaring 5.60% last week.

MOL gathered 1.11% after garnering 0.37% in the preceding week.

Magyar Telekom was down 0.97% after a rise of 4.05% last week.

Richter surged 6.54% after pocketing 3.38% over the previous week.

The BUMIX ended the week 0.17% higher after a plus of 1.27% over last week.

Elsewhere in the region, WIG 20 in Warsaw was down 1.39%, while Pragueʼs PX was off 0.41%.

Western Europeʼs major indices were all down ahead of their close on Friday, FTSE100 in London 0.24%, DAX30 in Frankfurt 0.22%, and CAC40 in Paris 0.24%.

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