The biggest story of BSE in 07.
Mol, Hungary’s biggest oil and gas company and Eastern Europe’s largest oil refiner by market value ($16.4 billion), plans to buy back shares this year to reduce their number in the market. The stock has increased by almost 25% since last Friday (June 22nd) if we take into consideration Tuesday’s (June 26th) price trading which has propelled MOL to an all-time high passing HUF 30,000 level. It all started last Friday, when MOL bought 1 percent of the total shares of the company in order to prevent a possible hostile takeover by another market player.
Megdet Rahimkulov, a former OAO Gazprom executive and Hungary’s richest billionaire, bought in the past month a significant stake of the company which as press releases such as Bloomberg claim was in turn sold this weekend to Vienna Capital Partners, who in turn sold the stake to Austrian oil company OMV. On Monday, OMV announced that they upped their stake to 18.6 percent from 10 percent which they already owned. The Austrian oil firm said they bought additional shares of MOL in order to entice closer alliances between the two companies amid energy sector consolidation. Reuters claimed on Sunday night that “the company is convinced by the long-term benefits of a closer cooperation.” The Austrian oil refiner thinks that a partnership between them could result in a good combination as they both have strengths in the regional central European market, preparing themselves to the unavoidable sector consolidation over the next 2-3 years. OMV said that they paid close to the market price for the 8.6 percent additional shares bought from Vienna Capital Partners. This would imply they paid a price close to 1 billion Euros for this stake. Partly because there has been some speculation in the market that MOL could become the target of a possible take-over, as well as investors speculate that MOL and OMV could further push up the price of the Hungarian stock if they get into a race to see who will buy a further stake in MOL.
Some analysts believe that MOL will continue buying some of its own shares in order to avert a potential takeover. MOL released an announcement where the company effectively rejected OMV's former partnership request adding that they would pursue its own strategy and confirmed that it would continue its buy-back program.
This is a clear signal that MOL intends to defend its independency.
Surprise interest rate cut by .25 % to 7.75 %
Hungary's central bank cut for the first time in more than half a year the base rate by .25 percent to 7.75 percent percent. When there are interests rate cuts, the most benefited equities are the dividend paying-utilities like Emasz (Hungarian electricity), dividend paying-Telecom stocks (Magyar Telekom), and banks (OTP.) Even at 7.75 percent the Hungarian rates are the highest in the European Union. The Hungarian central bank's key rate compares with 2.75 percent in the Czech Republic and 4.25 percent in Poland and Slovakia. The National Bank claimed that further rate cuts will only materialize if the inflationary risk further decreases. Data published in the past month show that inflation has peaked (8.5% for May) and is showing a slowing trend.
Another detail worth mentioning for this week is that the BUX or Hungarian index is at-its all-time-high surpassing the 29,000 level on Tuesday. OTP is also trading at a historical record high, already through the psychological level of 10,000 HUF. Even though other international and regional markets have cooled off, the Budapest Stock Exchange (BSE) continues strong, mostly due to the heavy buying of Hungarian oil and gas MOL (which encompasses 33% of the BUX or Budapest Stock index.)
Friday, 29 June 2007
Thursday, 7 June 2007
Bullish sentiment drives record highs; French, Russian and Chinese players have impact on the market
The stock market rally continued last week as the BUX, the Hungarian index, reached, once again, record prices on Friday (June 1).
In general, the global markets are up lately, whether there is good news, bad news, or, simply, no news at all.
The most noteworthy events in Hungary over the the past few weeks were the corporate rumors about Egis, one of the largest local pharmaceutical companies, as well as other stories surrounding the largest oil and gas company, MOL.
French connection
The press and several market players have speculated that Servier (a private French pharmaceutical company) could initiate a take-over of Egis, or that it would boost its stake in the company, in which it currently holds a 51% share. Both variations would trigger a public bid for Egis's minority owners.
In light of the rumors, the stock went up by 12% in the past couple of weeks.
Russian-born Hungarian banker and investor Megdet Rahimkulov, confirmed in the press that he held 5.23% of MOL shares directly and indirectly, but no additional detailed information regarding the reason for his interest in the company was made public.
Rahimkulov claimed that he wants to boost his stake in Hungarian fuels group MOL to 10%, and intends to acquire an even larger stake in OTP (in which he officially owns a little more than 5%.)
Other players jumped on the wagon and bought MOL once they speculated that there must be a good reason for the Russian billionaire to raise his MOL stake.
Chinese bubble
In terms of the rest of the global markets, the US continues reporting new record highs in spite of concerns about global implications of a potential bubble-burst in China.
China's main stock index tumbled 8.3% on Monday (June 4) in its second biggest drop this decade, extending big losses suffered last week after the government hiked the share trading tax to cool its bull run market.
Even though investors in Asia are selling their shares, many others are keeping their eyes closed, as other international markets have not been affected by the fear on the Asian bourses.
Investors perhaps remember that the Feb 27 downward move in the stock market, after a similar drop in Shanghai, simply produced an excellent buying opportunity with no lasting negatives.
As that is the general sentiment prevailing, I estimate that, when prices go significantly lower, traders will use this to buy stocks at a cheaper price, and the market will quickly rebound to new-time highs.
Of course, there are other, more bearish, analysts who believe that a market downward turn is just a signal to short stocks, and they predict that the market will keep falling on heavy selling pressure, which would mean that there is a sentiment-change from a bull market to a bear market.
In general, the global markets are up lately, whether there is good news, bad news, or, simply, no news at all.
The most noteworthy events in Hungary over the the past few weeks were the corporate rumors about Egis, one of the largest local pharmaceutical companies, as well as other stories surrounding the largest oil and gas company, MOL.
French connection
The press and several market players have speculated that Servier (a private French pharmaceutical company) could initiate a take-over of Egis, or that it would boost its stake in the company, in which it currently holds a 51% share. Both variations would trigger a public bid for Egis's minority owners.
In light of the rumors, the stock went up by 12% in the past couple of weeks.
Russian-born Hungarian banker and investor Megdet Rahimkulov, confirmed in the press that he held 5.23% of MOL shares directly and indirectly, but no additional detailed information regarding the reason for his interest in the company was made public.
Rahimkulov claimed that he wants to boost his stake in Hungarian fuels group MOL to 10%, and intends to acquire an even larger stake in OTP (in which he officially owns a little more than 5%.)
Other players jumped on the wagon and bought MOL once they speculated that there must be a good reason for the Russian billionaire to raise his MOL stake.
Chinese bubble
In terms of the rest of the global markets, the US continues reporting new record highs in spite of concerns about global implications of a potential bubble-burst in China.
China's main stock index tumbled 8.3% on Monday (June 4) in its second biggest drop this decade, extending big losses suffered last week after the government hiked the share trading tax to cool its bull run market.
Even though investors in Asia are selling their shares, many others are keeping their eyes closed, as other international markets have not been affected by the fear on the Asian bourses.
Investors perhaps remember that the Feb 27 downward move in the stock market, after a similar drop in Shanghai, simply produced an excellent buying opportunity with no lasting negatives.
As that is the general sentiment prevailing, I estimate that, when prices go significantly lower, traders will use this to buy stocks at a cheaper price, and the market will quickly rebound to new-time highs.
Of course, there are other, more bearish, analysts who believe that a market downward turn is just a signal to short stocks, and they predict that the market will keep falling on heavy selling pressure, which would mean that there is a sentiment-change from a bull market to a bear market.
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