BUX up in thin trade

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The Budapest Stock Exchange's main BUX index finished up 0.74% at 17,339.13 Friday after falling 0.80% Thursday from an almost two-month high. It is up 4.24% from year-end, after losing 10.40% last year. Low volumes showed investors became cautious after impetus earlier in the week fizzled out.

The BUX's outperformance was fueled mainly by Richter which corrected up on contradicting analysts' projections. On Thursday, it plunged 2.31% after initial forecasts pointed to its Q4 net results halving from a year ago. More forecasts out Friday still gave the same median projection, but estimates varied between a loss and a HUF 21.6 bln net profit which would be 4.5 times higher than a year ago.

The Greek crisis was put on the backburner until a meeting of euro zone finance ministers next Wednesday, but local news kept less daring investors on the sidelines.

Fresh statistics out Friday showed Hungary's industrial output grew more than expected year-on-year in December, but workday-adjusted growth slowed, sinking further below the annual average rate, with analysts predicting more deceleration to come as the base effect of the launch of new car manufacturing capacities a year earlier will fade.

Hopes for a series of efficient rate cuts by the National Bank of Hungary (MNB) from March were dented when senior governing party FIDESZ chief whip said on Friday the governing parties -- FIDESZ and junior partners Christian democrats -- wanted to keep inflation down in the future. The MNB is independent according to law, but its mandate have been modified in 2013 to include supporting the government's economic policy, and its governor is a veteran member of FIDESZ.

Meanwhile, according to press reports the MNB is about to prepare new regulations which would oblige banks to finance at least 30% of mortgage lending by issues of mortgage-backed securities from next year. This would cause new losses to banks on existing loans and prop up interest rates on new loans, although OTP would again suffer less than most its competitors, analysts say.

Expectations for the government to backtrack on sectoral taxes were blown away when the FIDESZ chief whip also said that if advertisement tax revenue falls, the government must find the replacement. Market climate improved earlier in the week when Hungary's cabinet chief suggested that, under EU pressure, the government was preparing to scrap the controversial advertisement tax in its present, highly progressive, form, penalising Bertelsmann's RTL Klub tv with a 50% rate, and to replace it with a more equitable flat tax of probably no more than 5% of advertising revenue.

MOL said on Friday that exports of crude oil from the Shaikan field of Iraq's Kurdistan region have been temporarily suspended due to a payment settlement "dialogue" with the Kurdistan Regional Government’s Ministry of Natural Resources.

OTP won 1.16% to HUF 3,920 on turnover of HUF 3.80 bln from a HUF 5.62 bln session total, a quarter short of the daily average this year.

MOL raked up 0.26% to HUF 11,730 on turnover of HUF 709 mln.

Magyar Telekom sank 1.09% to HUF 364 on turnover of HUF 261 mln.

Richter advanced 1.84% to HUF 3,825 on turnover of HUF 650 mln.

The bourse's mid-cap BUMIX went out 0.37% higher at 1,467.59.

Over the week, the BUX rose 4.89% after falling 1.36% in the previous week.

OTP was up 7.40% after losing 3.41% last week.

MOL rose 6.11% after dropping 1.38% the previous week.

Magyar Telekom increased 1.96% after rising 2.59% last week.

Richter gained 2.27% after sinking 0.93% over the previous week.

The BUMIX was up 3.15% over the week after easing 0.95% last week.

Elsewhere in the region, the WIG 20 in Warsaw was up 0.55%, while Prague's PX rose 0.81%. Western Europe's major indices were all down ahead of their close Friday, FTSE-100 in London 0.22%, DAX30 in Frankfurt 0.50%, and CAC40 in Paris 0.21%.

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