BUX slightly up as global mood sober

Telco

The Budapest Stock Exchangeʼs main BUX index finished up 0.22% at 21,628.47 Tuesday after rising 0.11% Monday. It is up 30.03% from year-end, after losing 10.40% last year.

The Budapest bourse hugged the previous dayʼs closing value for most of the day as global sentiment dimmed, experiencing with a slight upturn late in the afternoon after the National Bank of Hungary unveiled a new corporate lending incentive programme focusing on small and medium entreprises once more. The programme apparently did not fire up much of investorsʼ imagination as to how it could limit a projected slowdown in the economic growth next year if not but through its possibly negative effect on the Hungarian currencyʼs course which might help exports in the longer term.

After a slight improvement in August, corporate deleveraging came back with a vengeance in September. Calculated from figures published by Hungaryʼs central bank last Friday, corporate liabilities to financial institutions fell 0.6% by the end of September from end-August, while their deposits also thinned. Corporate credit volumes held by financial institutions were 7.7% smaller from a year ago, and 12.1% smaller compared to end-September 2013. Banks say it is not a lack of willingness or financing which holds them back from lending, instead it is a lack of domestic, mainly household, demand which limits companiesʼ investment plans and demand for creditable loans.

The programme also suggested the government was backtracking on an official pledge and a passed legislation to cut the special levy for all financial institutions from next year with no conditions attached.

Investors also received with mixed feelings the news that Volkswagenʼs emission-rigging scandal was about to widen to include VWʼs luxury brands Porsche and Audi, although VW denied any wrongdoing. Audiʼs plant in Hungary produces almost 10% of the countryʼs exports.

Market mood was apparently not brightened by an analysis of Fitch Ratings either that said Hungary was among countries slated to be upgraded to investment level next as such expectations have been thoroughly disappointed several times this year.

OTP rose 0.18% to HUF 5,510 on turnover of HUF 3.46 bln from a preliminary HUF 6.63 bln session total, about a quarter short of the daily average this year.

MOL rose 0.67% to HUF 12,800 on turnover of HUF 1.05 bln.

Magyar Telekom ended flat at HUF 393 on turnover of HUF 459 mln.

Richter retreated 0.02% to HUF 4,724 on turnover of HUF 1.63 bln.

The bourseʼs mid-cap BUMIX went out 0.18% lower at 1,595.64.

Elsewhere in the region, WIG 20 in Warsaw was down 0.72%, while Pragueʼs PX shed 0.65%.

Western Europeʼs major indices were mixed ahead of their close on Tuesday, with FTSE100 in London up 0.20%, DAX30 in Frankfurt down 0.16%, and CAC40 in Paris up 0.15%.

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