BUX rises further on credit upgrade, rate cut hopes

Telco

The Budapest Stock Exchangeʼs main BUX index finished up 0.53% at 19,327.38 Monday, a fourteen-month peak, after rising 1.64% Friday to a near ten-month high. It is up 16.19% from year-end, after losing 10.40% last year. Over last week, the BUX added 3.00% after a plus of 2.09% in the previous week.

With bubbling slowed by falling euro zone markets, the Budapest parquet rose for a third day, reaching levels last seen in January last year after S&P chipped in a surprise one-notch upgrade of Hungaryʼs credit rating Friday after-close. S&P lifted the rating of the regionʼs most indebted state to "BB plus", still one notch below investment grade, but this was Hungaryʼs first upgrade since all credit rating agencies have knocked the country into junk territory in 2011 on the governmentʼs unorthodox economic policies. S&P explained its decision, which skipped a usual in-advance outlook upgrade, with improved economic growth and budget prospects, and decreasing vulnerability to external shocks.

Meanwhile, waiting for a larger than previously expected rate cut by the National Bank of Hungary (MNB) on Tuesday kept the Hungarian forint, which appreciated after S&Pʼs move, under lid, supporting exporters for most of the day, with Richter slightly sinking in last trades only.

The rally accelerated last week after diminishing prospects of a mid-year US rate rise prompted investors back into emerging market assets, speculating that to dollarʼs rise, that had lured money out of other assets, may have run its course for the time being.

MOL was also aided by an interview with Russiaʼs ambassador to Budapest who said Hungary could become a regional distribution hub for Russian and other gas, while OTP, which surged to a close to four-year high on Friday, was subdued after a regular re-arrangement on Monday of the BUX basket left it with smaller weighting than previously.

OTP won 0.02% to HUF 5,101 on turnover of HUF 12.44 bln from a HUF 14.78 bln session total, 70% above of the daily average this year.

MOL rose 2.09% to HUF 11,950 on turnover of HUF 1.12 bln.

Magyar Telekom ended flat at HUF 386 on turnover of HUF 340 mln.

Richter retreated 0.08% to HUF 3,947 on turnover of HUF 782 mln.

The bourseʼs mid-cap BUMIX went out 0.28% higher at 1,528.48.

Elsewhere in the region, WIG 20 in Warsaw was up 0.28%, while Pragueʼs PX gathered 0.03%. Western Europeʼs major indices were mixed ahead of their close Monday, with FTSE-100 in London up 0.10%, DAX30 in Frankfurt down 1.24%, and CAC40 in Paris down 0.85%.

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