"Share prices on the Budapest Stock Exchange plummeted amid the global rout in the world financial system on Wednesday. The BUX index fell 7.3%, weighed down by the 13% decline in OTP’s share price. The BUX is down 15% so far this week.Any positive effects of yesterday’s co-ordinated interest rate cuts across the globe were short-lived and did not stop the sell-off. Indices in London, Frankfurt and Paris were all down by about 4% or more.
In Budapest, trading in OTP shares had to be suspended twice after plunging more than 10%. The bank’s stock fell to a four-year low, ending a dreadful day down 13.3% at Ft 4,500. OTP has lost one-fourth of its market capitalisation in the past three days.
Trading in MOL was also suspended after shares fell 13% to Ft 12,060. The shares later surged to an intra-day high of Ft 13,650 before retreating to a closing price of Ft 13,000, a 6.1% decline for the day.
Richter shares lost only 2.3% of their value. Magyar Telekom shares sank 6.6%.
Small-cap stocks were all deep in the red, with the exception of Econet and Danubius.
“We can expect a prolonged crisis, and stock market investments still pose considerable risks,” Raiffeisen Bank analyst Levente Blahó told Napi Gazdaság.
However, some analysts see a sharp rebound in share prices in the near term, as investors could start bargain-hunting at these price levels. Such a so-called bear-market rally could bring OTP back to Ft 6,000 and MOL to Ft 16,000, according to Ákos Kuti of Cashline brokers. The reporting season in the US could prove to be a turnaround, provided that corporate profits are in line with analysts’ estimates, he added.
The slide in the stock market has wiped at least Ft 600 billion off the value of investments in Hungary, according to an estimate by hvg.hu. Shares and stock-heavy investment funds have been the worst performers.
The global rout in the financial markets has made safe investments a priority in the minds of investors, hvg.hu adds. Bank deposits are growing more popular in the face of the crisis, with some banks offering interest rates of over 10%."
Source: Hungary Around the Clock.
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09.10.2008