BUX up on European recovery

In line with European peers recovering on a cheaper euro and soothing words from Greece and its European creditors alike playing down fears that Athens would default on a payment to the International Monetary Fund (IMF) next week, the Budapest parquet also improved.

The pace accelerated after a Greek government official told Reuters that the Brussels group of Athensʼ official creditors had started procedures to draw up a staff-level agreement.

Sentiment apparently overrode local worries. Fresh Hungarian data out Wednesday confirmed annual retail sales growth continued to slow for a second month in March in calendar-adjusted terms, which is not surprising in view of a twin slowdown in annual growth of registered, full time employment on the national economy level and at private firms in particular. In March the total number of fully employed people actually fell from February over the national economy.

In light of National Bank of Hungary (MNB) calculations out Wednesday, which showed the central budgetʼs VAT revenue increased an annual 7% in the first half of last year, then jumped 16% in the second half, analysts still attribute any or most retail trade growth on a statistical level to the mandatory introduction of e-tills directly connected to the tax authority, a process which culminated towards the end of last year, and the base-effect of which is to fizzle out later this year. Meanwhile, a mandatory Sunday closure of large shops, introduced middle-March, is still to show up in statistics.

Next year, EU funds will lag behind those this year, the MNB warned on Wednesday.

Stars of the day were MOL and Richter as traditional safe heavens, but OTP also fared increasingly well after the MNB decided on Wednesday that the high level of foreign-currency

reserves at the central bank makes it possible for commercial banks to close their unlimited forint-euro swap deals sooner than planned. The swap deals are related to the mandatory conversion of household forex mortgages into forint debt. The Forex reserves exceed various requirement measures as well as investorsʼ expectations, MNB said, adding that closing the swap deals sooner than maturity could help banks improve their books, reduce their external indebtedness, and the central bank to narrow its balance sheet.

Wood & Co. was also helpful with lifting its target price on Erste Group, saying "we see Erste Bank as a viable play on the CEE economic recovery, the restoration of profitability in Hungary and Romania in particular."

OTP won 1.63% to HUF 5,660 on turnover of HUF 5.99 bln from a HUF 13.79 bln session total, nearly a third above the daily average this year.

MOL gained 2.07% to HUF 15,005 on turnover of HUF 3.96 bln.

Magyar Telekom rose 0.24% to HUF 416 on turnover of HUF 506m.

Richter advanced 2.20% to HUF 4,640 on turnover of HUF 2.61 bln.

The bourseʼs mid-cap BUMIX went out 0.54% higher at 1,593.61.

Elsewhere in the region, WIG 20 in Warsaw was up 0.49%, while Pragueʼs PX shot up 1.64%. Western Europeʼs major indices were all up ahead of their close Wednesday, FTSE100 in London 1.38%, DAX30 in Frankfurt 1.33%, and CAC40 in Paris 2.04%.