BUX down on global mood

In local news, producer price deflation deepened in February, but investors doubt the National Bank of Hungary (MNB) could chip in larger than expected base rate cuts with a Fed tightening on the horizon.

Corporate lending stock of banks in Hungary fell in February on revaluation of forex loans due to the appreciation of the forint, while forint lending grew a little from January, MNB statistics on Tuesday showed. Forint financing could reflect the effect of the MNBʼs Funding for Growth program for SMEʼs only, while market based lending most probably continued to stagnate, analysts added.

An analystsʼ survey of quoted companies that have already announced dividend plans on last yearʼs results showed that most proposed smaller pay-outs from a year ago, with MOL and Richter among them.

Political uncertainties also influenced local market mood, after the government suspended construction of a motorway stretch in E Hungary pending a cartel scrutiny by the European Commission. One of the contractors is Kozgep, an interest of Lajos Simicska, the former treasurer of the governing Fidesz party and a former close friend of the prime minister who recently declared a media war on the government in the wake of the advertisement tax introduced last year which hurt his media businesses.

Confidence is also volatile after the government spokesman said the memory of the prime minister and of his cabinet chief failed them when they answered questions on when and how they had received information pointing to the imminent failure of Hungarian brokerage house Quaestor. The parliamentary opposition accuses the government of insider trading since it turned out that the prime minister ordered ministries and other public entities to withdraw investments from brokerages after the failure of one brokerage, Buda-Cash, at the end of February, but before the bankruptcy announcement two weeks later of another, Quaestor, without warning private investors or initiating legal procedure.

In the wake of the brokeragesʼ scandal the government plans to order local councils to have accounts at the state treasury only, a measure that could take business away from banks, too, including OTP.

OTP lost 1.21% to HUF 5,304 on turnover of HUF 5.52 bln from a HUF 10.03 bln session total, 6% above the daily average this year. OTP reached a close to four-year high last Wednesday at HUF 5,440.

MOL fell 2.10% to HUF 12,120 on turnover of HUF 1.55 bln.

Magyar Telekom dipped 0.48% to HUF 412, further down from a 23-month high last Friday, on turnover of HUF 488 mln.

Richter retreated 3.36% to HUF 3,850 on turnover of HUF 2.38 bln.

The bourseʼs mid-cap BUMIX went out 0.46% lower at 1,517.48.

Elsewhere in the region, WIG 20 in Warsaw was down 0.31%, while Pragueʼs PX garnered 0.23%. Western Europeʼs major indices were all down ahead of their close Tuesday, FTSE-100 in London 1.47%, DAX30 in Frankfurt 0.72%, and CAC40 in Paris 0.74%.