BUX follows European peers down

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The Budapest Stock Exchange's main BUX index finished down 0.80% at 17,605.28 Tuesday, after losing 0.02% Monday. It is down 5.16% from the end of last year, after it rose 2.15% in 2013. The Budapest parquet followed euro area peers downwards. On the local front, investors also had much to digest. Hungary's foreign trade surplus roughly halved in October from a year earlier as exports fell and imports grew, according to statistics out on Tuesday.

A state secretary of the Hungarian foreign ministry has warned that although Hungary's recent bad reputation in countries such as the US, Germany and Austria "is not yet reflected in export or investment figures, but if we cannot find a political solution to issues like the US entry ban and corruption charges these will backfire sooner or later", he said at a conference.

The official also said that the government was working to increase the proportion of industry within Hungary's GDP from 26% to 30% by promoting high value-added sectors. The targeted proportion is in line with the world average, but the average of G7 countries is 24%, while the average of G20 countries other than G7 is 37%, CIA World Factbook shows.

The risk of unorthodox policy measures is highest in Hungary, but the short-term outlook has improved following the government's decision to force the conversion of forex retail mortgages at close to the spot rate, rather than below market rate, Fitch Ratings said in a wider assessment of outlook for Austrian banks. The high recurring regulatory costs, tough operating conditions and weak asset quality mean, however, that Hungary is likely to be an earnings burden in 2015, and the likelihood of Austrian banks leaving (Hungary) has increased with the uncertainty in the market's long-term recovery prospects, Fitch Ratings added.

Meanwhile, Hungary's parliament approved on Tuesday legislation hitting foreign supermarket chains more than their local competitors.

The governor of the National Bank of Hungary (MNB) told parliament on Tuesday that the bank's main task next year would be to defend the country against possible external financial shocks, as Hungary must prepare for tough times, including "external attacks" against the country's financial system.

OTP fell 0.83% to HUF 4,046 on turnover of HUF 2.80 bln from a HUF 5.42 bln session total, more than two-thirds of the daily average this year. MOL lost 0.78% to HUF 12,085 on turnover of HUF 1.30 bln. Magyar Telekom slid 1.13% to HUF 350 on turnover of HUF 130 mln. Richter retreated 0.65% to HUF 3,850 on turnover of HUF 1.03 bln. The bourse's mid-cap BUMIX went out 0.08% higher at 1,462.34.

Elsewhere in the region, Warsaw's WIG20 was down 1.35%, while Prague's PX dropped 1.58%. Western Europe's major indices were all down ahead of their close Tuesday, FTSE-100 in London 2.03%, DAX30 in Frankfurt 2.05%, and CAC40 in Paris 2.43%.

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