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.