Stocks tumbled worldwide last week as treasuries bonds rallied when investors sold off their stocks turning away from riskier assets into safe-haven ones like treasury bonds. Although the relationship between Treasury bond prices and the stock market is fairly indirect, the two tend to move in opposite directions. When investors panic or become bearish about their investments in the stock market, they tend to transfer their cash into the bond market, buying much safer instruments in exchange for their riskier stocks.
Many analysts have claimed that the reason of the sell-off was the recent concern about borrowing costs in the US which could slow takeovers and mergers, spur debt defaults, and curb earnings, prompting investors to flow riskier assets such as stocks. Many other also talk about the housing recession, exacerbated by climbing foreclosures among subprime borrowers. But haven’t we heard that story for more than 2 years? Perhaps analysts are just looking for reasons for a more than overdue negative correction. The question that I ask myself at this point is whether this is just a buy signal for cheaper bargain stocks or whether this is a more serious occurrence that can change the current bull market sentiment to a bear one. Stocks have risen to mighty heights prodigiously fast. The Dow Jones index has hit three milestones in nine months - crossing 12,000 in October, 13,000 in April, and just 2 weeks ago, 14,000. Sell-offs in equity markets are frequent, perfectly normal, and even healthy. When stocks increase in such a rapid manner their prices become unsustainably high. Only by falling occasionally (and even sharply) in the short run can stocks continue to rise in the long-term. Without the anguish of today's drop, the frenzy of tomorrow's good returns becomes unattainable.
The Hungarian Forint (HUF) extended looses all last week as emerging currencies continued to suffer from increased global risk aversion. The forint slide started on Wednesday of last week as emerging market assets were hit across the board when investors shun emerging markets such as Hungary on growing concerns, many claim, of a US mortgage fallout.
Other central European currencies suffered from the sell- off, such as the Polish zloty and the Slovak koruna.
Gedeon Richter Nyrt., Eastern Europe's biggest drug maker, published second-quarter results on Tuesday July 31. The results were better than expected. Sales revenue was HUF43.4bn vs the consensus 41.6bn. The higher sales were fueled by export sales (former Russian Republics, US, and EU markets) On the other hand, the domestic sales were hurt by the Hungarian government slashing subsidies and raising duties on drug makers. The analysts of Cashline Securities (Budapest) believe the results reflect signs of a rebound in the operations after the last 12-month market fallback in export markets and the negative effects of the changing local legislation. After the results, Richter received heavy buying pressure as investors are more optimistic of the Hungarian Pharmaceutical stock.
Hungarian oil and gas company MOL on Tuesday announced it had signed an agreement
to purchase 100pc of Italian peer Italiana Energia e Servizi (IES) for a price in line with MOL's target.
Bloomberg news claims that the final purchase price will be disclosed only after the closing of the transaction, expected to take place in Q4 2007, after approval by competition authorities.
MOL said it would transfer its know-how to improve the profitability of the refining and marketing operations.
This acquisition might somewhat disappoint the market from the point of view of pricing, but the might trigger a moderate upside in the share price.
On the other hand, many analysts do not expect a significant fall in the share price until the speculation regarding a buyout offer from Austrian competitor OMV remains and MOL continues purchasing its own treasury shares in order to avoid a hostile takeover.
Tuesday, 31 July 2007
Wednesday, 25 July 2007
MOL - OMV saga continues to dominate BSE talk
The Budapest Stock Exchange (BSE) index, the BUX, moved marginally down last week closing at 29,790 points on higher than average volume, as Hungarian oil and gas refiner MOl NyRt continues its buy-back program on its treasury shares. Mol, Hungary's largest company and owner of the nation's only refinery has already spent approximately Ft344bn ($1.9bn) buying back its shares to fight off a potential takeover from Austrian competitor OMV AG.
Mol closed a bit higher at the end of the week at Ft29,700 ($166). OTP Bank NyRt saw its highest closing price ever at Ft10,939 ($61) on Monday (July 23).
Dow Jones, the US financial publisher, also reported on Monday that MOL could be considering a merger with Poland's PKN Orlen, citing a report in Polish daily Gazeta Prawna, which quoted unnamed sources at MOL.
There have been some market rumors about a possible merger between MOL, with market value of almost $18bn and PKN Orlen, with market share of $9bn, in order to further avoid a possible takeover by OMV, although a spokesman for Budapest based-Mol rejected such reports.
According to Austrian national daily newspaper, Der Standard, Austria's economic minister, Martin Bartenstein, supports the idea of a merger between MOL and OMV.
He claimed that the EU would not block such a deal. Some market rumors claim OMV's CEO, Wolfgang Ruttenstorfer, is considering breaking off from his summer vacation due to the MOL-OMV issue.
The analysts of Cashline Securities believe that OMV has to take action very soon, if it is to strike, which could materialize in action at the EU court over the issue of MOL's buy back program. (MOL is allowed to hold only 10% of its shares. It currently has 2%, but has "loaned" almost 18% to OTP and the state-owned Hungarian Development Bank, or MFB Rt).
Cashline Securities maintain that MOL's share price will narrow to the Ft29,000-30,000 ($162-168) range in the short-term unless OMV makes a public offer.
Rate setting
On Monday (July 23), Hungary's central bank (MNB) kept its benchmark interest rate unchanged (and at the European Union's highest level), after inflation picked up on June.
The bank's policy makers, led by President András Simor, kept the rate at 7.75%.
Last month, the central bank cut its benchmark rate for the first time since 2005, as it expected inflation to slow down.
However, consumer price growth accelerated in June for the first time in three months, which could have been the reason for the delay in further rate reductions.
Unless there are clear signals of falling inflationary pressure, the MNB does not have enough room to ease key interest rates. The forint remains extraordinarily strong versus the dollar and euro.
The annual inflation rate rose to 8.6% in June from 8.5% the month before, the EU's second-highest rate.
The bank has a stated aim of cutting inflation to 3% within the next two years. But many central banks around the world have raised interest rates since the beginning of March, including those of US, the UK and the EU, making it harder for the MNB to cut rates.
Investors in Hungarian stocks should keep an eye on the second quarter earnings which will be published from next week until Aug 15. The first to report earnings will be Hungarian largest pharmaceutical company, Richter Gedeon NyRt, which is scheduled to announce its earnings on July 30 or 31.
In addition, global investors will continue paying attention to earnings in US companies. The results so far are quite mixed. To date, more than 129 companies in the US have reported quarterly results, with 60% of those beating Wall Street projections, according to Thomson First Call.
Investors will have plenty more earnings news to look forward to in the next weeks. If companies continue to support the positive sentiment in the US markets, the BSE will continue to touch record highs.
The Budapest Stock Exchange (BSE) index, the BUX, moved marginally down last week closing at 29,790 points on higher than average volume, as Hungarian oil and gas refiner MOl NyRt continues its buy-back program on its treasury shares. Mol, Hungary's largest company and owner of the nation's only refinery has already spent approximately Ft344bn ($1.9bn) buying back its shares to fight off a potential takeover from Austrian competitor OMV AG.
Mol closed a bit higher at the end of the week at Ft29,700 ($166). OTP Bank NyRt saw its highest closing price ever at Ft10,939 ($61) on Monday (July 23).
Dow Jones, the US financial publisher, also reported on Monday that MOL could be considering a merger with Poland's PKN Orlen, citing a report in Polish daily Gazeta Prawna, which quoted unnamed sources at MOL.
There have been some market rumors about a possible merger between MOL, with market value of almost $18bn and PKN Orlen, with market share of $9bn, in order to further avoid a possible takeover by OMV, although a spokesman for Budapest based-Mol rejected such reports.
According to Austrian national daily newspaper, Der Standard, Austria's economic minister, Martin Bartenstein, supports the idea of a merger between MOL and OMV.
He claimed that the EU would not block such a deal. Some market rumors claim OMV's CEO, Wolfgang Ruttenstorfer, is considering breaking off from his summer vacation due to the MOL-OMV issue.
The analysts of Cashline Securities believe that OMV has to take action very soon, if it is to strike, which could materialize in action at the EU court over the issue of MOL's buy back program. (MOL is allowed to hold only 10% of its shares. It currently has 2%, but has "loaned" almost 18% to OTP and the state-owned Hungarian Development Bank, or MFB Rt).
Cashline Securities maintain that MOL's share price will narrow to the Ft29,000-30,000 ($162-168) range in the short-term unless OMV makes a public offer.
Rate setting
On Monday (July 23), Hungary's central bank (MNB) kept its benchmark interest rate unchanged (and at the European Union's highest level), after inflation picked up on June.
The bank's policy makers, led by President András Simor, kept the rate at 7.75%.
Last month, the central bank cut its benchmark rate for the first time since 2005, as it expected inflation to slow down.
However, consumer price growth accelerated in June for the first time in three months, which could have been the reason for the delay in further rate reductions.
Unless there are clear signals of falling inflationary pressure, the MNB does not have enough room to ease key interest rates. The forint remains extraordinarily strong versus the dollar and euro.
The annual inflation rate rose to 8.6% in June from 8.5% the month before, the EU's second-highest rate.
The bank has a stated aim of cutting inflation to 3% within the next two years. But many central banks around the world have raised interest rates since the beginning of March, including those of US, the UK and the EU, making it harder for the MNB to cut rates.
Investors in Hungarian stocks should keep an eye on the second quarter earnings which will be published from next week until Aug 15. The first to report earnings will be Hungarian largest pharmaceutical company, Richter Gedeon NyRt, which is scheduled to announce its earnings on July 30 or 31.
In addition, global investors will continue paying attention to earnings in US companies. The results so far are quite mixed. To date, more than 129 companies in the US have reported quarterly results, with 60% of those beating Wall Street projections, according to Thomson First Call.
Investors will have plenty more earnings news to look forward to in the next weeks. If companies continue to support the positive sentiment in the US markets, the BSE will continue to touch record highs.
Friday, 20 July 2007
Positive sentiment in BSE
The Budapest Stock Exchange index, BUX, moved marginally up last week on high volume as there was continuous heavy trading at Hungarian oil company Mol. The BUX closed on Monday 16th of July at 30,005 points, which is a record high closing for the index.
Mol continues to climb back slowly, and closed on Monday at Ft29,700 ($166.64). OTP Bank NyRt had its highest closing price to date on Monday at Ft10,850 ($60.85), while Hungary's largest pharmaceutical company Richter Gedeon NyRt continued making marginal gains to close at Ft38,005 ($212.25) on Monday.
Last month, Austrian oil company OMV AG raised its stake in Budapest-based Mol to 18.6% from 10% and said it wanted talks on "cooperation."
Hungary's government labeled it as a hostile bid and is seeking to protect Mol's independence by saying it might draft legislation that would allow it to block a possible takeover by the oil company's Austrian rival.
The Economic Minister, János Kóka, also confirmed in an interview that the government would not back a merger, but would support MOL to become a "regional multinational" company.
The minister said any stronger cooperation would be possible only if the Austrian government sells its 31.5% stake in OMV.
Mol, Hungary's biggest company, has officially rejected any approach from its Austrian peer, calling it "unsolicited and unwelcome."
Zsolt Hernándi, CEO of Mol, said that he saw no chance for a merger, adding that stronger cooperation would be more likely with those companies that have different assets, such as Lukoil (Russia's largest oil company) or Rosneft, also of Russia.
Mol's management believes that a combination with OMV would not be beneficial for Mol, shareholders or any other parties involved (see No benefit from OMV merger, MOL says, Daily Updates, The Budapest Sun Online, July 11). An OMV spokesman denied that the Austrian company had made a formal offer to acquire Mol.
Strategic
Mol also said it will continue with its strategic future acquisitions of Russian oil fields, and a potential increase in its ownership share in Croatian refinery INA (of which it currently holds 25%.)
The MOL board decided on Monday, July 16, to increase the dividend payout ratio to 40%, starting 2008, depending on investment opportunities.
This would mean roughly a dividend of Ft800-1,000 ($4.48-5.61) per share from next year, under normal external assumptions. The dividend was Ft508 ($2.85) per share last year.
Furthermore, the company has announced it intends to continue its share buyback program. The board of directors intends to request authorization to cancel treasury shares at the next annual general meeting.
Mol has already spent almost Ft300bn ($1.68bn) on its share-buyback program, in the past few weeks. The company lent 10% of its stock to state-owned bank MFB Rt, and 8% to OTP, whose Chairman, Sándor Csányi, is a Mol vice president. The transactions will help Mol buy back more of its stock, as the legal limit it can hold is 10%.
Analysts from Cashline Securities claimed in regards to Mol's issue that "fundamentally and from an operational point of view, we do not see a further upside in the share price; however the raise in the dividend pay-out ratio target and a further share buy-back are likely to keep the share price close to Ft30,000 in the very short-term.
"We also doubt whether the company really intends to cancel its treasury shares at the next AGM, as it would dilute its control and lift OMV's influence again (unless MOL keeps buying until it reaches 60%.)"
In my opinion, the positive sentiment currently prevailing in the BSE and other global markets will continue, at least in the short-term. In fact, the Dow index was close to reaching a record high 14,000 points on Monday.
This week will see more companies reporting their second-quarter corporate earnings in the US. If companies meet or slightly exceed market expectations (which have been lowered ahead of time), the share price will receive buying interest.
If the US market keeps performing the way it has so far, we can be almost certain that the BSE will continue making new historic record highs.
The Budapest Stock Exchange index, BUX, moved marginally up last week on high volume as there was continuous heavy trading at Hungarian oil company Mol. The BUX closed on Monday 16th of July at 30,005 points, which is a record high closing for the index.
Mol continues to climb back slowly, and closed on Monday at Ft29,700 ($166.64). OTP Bank NyRt had its highest closing price to date on Monday at Ft10,850 ($60.85), while Hungary's largest pharmaceutical company Richter Gedeon NyRt continued making marginal gains to close at Ft38,005 ($212.25) on Monday.
Last month, Austrian oil company OMV AG raised its stake in Budapest-based Mol to 18.6% from 10% and said it wanted talks on "cooperation."
Hungary's government labeled it as a hostile bid and is seeking to protect Mol's independence by saying it might draft legislation that would allow it to block a possible takeover by the oil company's Austrian rival.
The Economic Minister, János Kóka, also confirmed in an interview that the government would not back a merger, but would support MOL to become a "regional multinational" company.
The minister said any stronger cooperation would be possible only if the Austrian government sells its 31.5% stake in OMV.
Mol, Hungary's biggest company, has officially rejected any approach from its Austrian peer, calling it "unsolicited and unwelcome."
Zsolt Hernándi, CEO of Mol, said that he saw no chance for a merger, adding that stronger cooperation would be more likely with those companies that have different assets, such as Lukoil (Russia's largest oil company) or Rosneft, also of Russia.
Mol's management believes that a combination with OMV would not be beneficial for Mol, shareholders or any other parties involved (see No benefit from OMV merger, MOL says, Daily Updates, The Budapest Sun Online, July 11). An OMV spokesman denied that the Austrian company had made a formal offer to acquire Mol.
Strategic
Mol also said it will continue with its strategic future acquisitions of Russian oil fields, and a potential increase in its ownership share in Croatian refinery INA (of which it currently holds 25%.)
The MOL board decided on Monday, July 16, to increase the dividend payout ratio to 40%, starting 2008, depending on investment opportunities.
This would mean roughly a dividend of Ft800-1,000 ($4.48-5.61) per share from next year, under normal external assumptions. The dividend was Ft508 ($2.85) per share last year.
Furthermore, the company has announced it intends to continue its share buyback program. The board of directors intends to request authorization to cancel treasury shares at the next annual general meeting.
Mol has already spent almost Ft300bn ($1.68bn) on its share-buyback program, in the past few weeks. The company lent 10% of its stock to state-owned bank MFB Rt, and 8% to OTP, whose Chairman, Sándor Csányi, is a Mol vice president. The transactions will help Mol buy back more of its stock, as the legal limit it can hold is 10%.
Analysts from Cashline Securities claimed in regards to Mol's issue that "fundamentally and from an operational point of view, we do not see a further upside in the share price; however the raise in the dividend pay-out ratio target and a further share buy-back are likely to keep the share price close to Ft30,000 in the very short-term.
"We also doubt whether the company really intends to cancel its treasury shares at the next AGM, as it would dilute its control and lift OMV's influence again (unless MOL keeps buying until it reaches 60%.)"
In my opinion, the positive sentiment currently prevailing in the BSE and other global markets will continue, at least in the short-term. In fact, the Dow index was close to reaching a record high 14,000 points on Monday.
This week will see more companies reporting their second-quarter corporate earnings in the US. If companies meet or slightly exceed market expectations (which have been lowered ahead of time), the share price will receive buying interest.
If the US market keeps performing the way it has so far, we can be almost certain that the BSE will continue making new historic record highs.
Wednesday, 11 July 2007
Blue Chips take it in turn to support BSE bull run
The BUX, Hungary’s stock market index, moved moderately higher for the week, not even 1%, while the US Dow index is close to hitting a new historical high at levels of 13,650 points (closing level on Monday July 9th.)
The BUX is composed of more than a dozen stocks, but only five of them can be considered Blue Chips because of their greater market capitalization. Those so-called Blue chips are: OTP (largest local bank), MOL (oil and gas refiner), MTEL (Telecom), and Richter (the largest pharmaceutical producer in Hungary.)
OTP, MOL, and Magyar Telekom closed flat for the week. The winner for the week was Hungary’s pharmaceutical Richter as it gained almost 5% (closing on Monday 9th July at HUF 38,500.)
Richter might be getting some more attention from big investors as its outlook for the long term seems to become more and more positive, as claimed by Kornel Szarkadi - Szabo head of research in Cashline Securities. The analysts from Cashline have upgraded the stock and say that the pharmaceutical company can reach more than HUF 46,600 by the end of 2008. In their research they claim that Richter could significantly receive heavy buying pressure in the case they have a better than expected second quarter earnings report in August or if the HUF starts weakening against the EUR and/or the USD. A strong forint hurts profits in Richter as it shrinks its gross profit since exports become more expensive. In the case Richter is acquired by another party (and assuming a double-digit growth in 2008) the stock could exceed HUF 55,000-60,000 per share by 2009 or 2010. However, the analyst believes a takeover would not happen until at least 2009. For this matter, the research report should be considered more like a long term buy idea, rather than a short- term buy action with the purpose of “making a quick buck.”
MOL continues in the headlines as the story continues to unravel. Mol, Hungary’s biggest oil and gas company and Eastern Europe’s largest oil refiner by market value ($16.4 billion), continues its plans to buy back shares this year to reduce their number in the market and to avert a potential takeover from Austrian competitor OMV. This week, OMV's CEO Ruttenstorfer reiterated his former comments regarding the purchase of MOL’s stake. He also added that OMV believes that they would not buy MOL until the next few years, which adds a new tone, as OMV's former plans included only a strategic cooperation with MOL. MOL released an announcement where the company effectively rejected OMV's former partnership request adding that they would pursue its own strategy.
This week kicks off the second-quarter corporate earnings reporting period in the US when the first major company from the Dow are due to report. Like the first quarter earnings of this year, analysts and economists lowered the bar of expectations for company’s earnings, which means that companies will not have too much difficulty meeting or exceeding the market prospects. For this reason, I expect that the international sentiment will continue somewhat bullish and that the bull of Pamplona will keep running for the summer season. The Hungarian companies will start reporting their second quarter earnings in August, when we will be expectant about the outcome and whether or not they meet the market consensus. It could be a determining factor of the direction of the Hungarian Blue Chips, but the international sentiment will move the BSE (Budapest Stock Exchange) more than any surprises in their earning’s reports.
The BUX is composed of more than a dozen stocks, but only five of them can be considered Blue Chips because of their greater market capitalization. Those so-called Blue chips are: OTP (largest local bank), MOL (oil and gas refiner), MTEL (Telecom), and Richter (the largest pharmaceutical producer in Hungary.)
OTP, MOL, and Magyar Telekom closed flat for the week. The winner for the week was Hungary’s pharmaceutical Richter as it gained almost 5% (closing on Monday 9th July at HUF 38,500.)
Richter might be getting some more attention from big investors as its outlook for the long term seems to become more and more positive, as claimed by Kornel Szarkadi - Szabo head of research in Cashline Securities. The analysts from Cashline have upgraded the stock and say that the pharmaceutical company can reach more than HUF 46,600 by the end of 2008. In their research they claim that Richter could significantly receive heavy buying pressure in the case they have a better than expected second quarter earnings report in August or if the HUF starts weakening against the EUR and/or the USD. A strong forint hurts profits in Richter as it shrinks its gross profit since exports become more expensive. In the case Richter is acquired by another party (and assuming a double-digit growth in 2008) the stock could exceed HUF 55,000-60,000 per share by 2009 or 2010. However, the analyst believes a takeover would not happen until at least 2009. For this matter, the research report should be considered more like a long term buy idea, rather than a short- term buy action with the purpose of “making a quick buck.”
MOL continues in the headlines as the story continues to unravel. Mol, Hungary’s biggest oil and gas company and Eastern Europe’s largest oil refiner by market value ($16.4 billion), continues its plans to buy back shares this year to reduce their number in the market and to avert a potential takeover from Austrian competitor OMV. This week, OMV's CEO Ruttenstorfer reiterated his former comments regarding the purchase of MOL’s stake. He also added that OMV believes that they would not buy MOL until the next few years, which adds a new tone, as OMV's former plans included only a strategic cooperation with MOL. MOL released an announcement where the company effectively rejected OMV's former partnership request adding that they would pursue its own strategy.
This week kicks off the second-quarter corporate earnings reporting period in the US when the first major company from the Dow are due to report. Like the first quarter earnings of this year, analysts and economists lowered the bar of expectations for company’s earnings, which means that companies will not have too much difficulty meeting or exceeding the market prospects. For this reason, I expect that the international sentiment will continue somewhat bullish and that the bull of Pamplona will keep running for the summer season. The Hungarian companies will start reporting their second quarter earnings in August, when we will be expectant about the outcome and whether or not they meet the market consensus. It could be a determining factor of the direction of the Hungarian Blue Chips, but the international sentiment will move the BSE (Budapest Stock Exchange) more than any surprises in their earning’s reports.
Tuesday, 10 July 2007
The Budapest Stock Exchange index, BUX, moved marginally last week with extremely high volume as continued heavy selling at Hungarian oil company MOL offset strong gains at OTP Bank. The BUX has closed on Monday the 2nd of July at 28,984. For the past week, the trading volume has accounted for at least double the daily average as we have seen USD 200 million or USD 300 million in daily turnover instead of the average USD 100 million.
After gaining almost 25% in three trading days (from Friday 22nd July until Tuesday 26 st July) MOL started to fall, losing approximately 8 percent since then as speculation of a bid by Austrian competitor OMV has been cooling off. We have been seeing heavy selling of the oil and gas refiner as there is speculation now that MOL will not be subject to a take-over from OMV at least for the short-term.
Hungary's government is drafting legislation that would allow it to block a possible takeover of oil and gas company Mol by its Austrian rival OMV. According to the Financial Times, Finance Minister Janos Veres said the Hungarian government is looking for ways to protect strategically industries such as MOL without violating European Union regulations. OMV already announced that they upped their stake to 18.6 percent from 10 percent. 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.
Elsewhere, OTP continued to outperform. Giant bank HSBC hiked its forecast on the Hungarian bank stock, giving the shares a new target price of 12,308 forints compared to 10,642 forints from its previous recommendation. HSBC said domestic political risk to the bank's growth targets had decreased. They also felt that the growth at its Russian subsidiary will be a key factor in delivering important future growth prospects. In addition, to these comments from HSBC’s analysts, Citigroup also mentioned OTP as one of their favorite picks within the CEEMEA areas.
Last week brought an unexpected rate decision from Hungary’s central bank: interest rates were cut by a quarter point to 7.75%. The decrease in interest rates was a surprise as the timing was a bit earlier but otherwise consistent with market expectations in terms of direction and measurement.
Hungary’s unexpected rate cut barely made the headlines given all the other excitement taking place with MOL’s story, which experienced record trading volumes as well as helped the Hungarian index (BUX) and OTP reach a record high last week.
After gaining almost 25% in three trading days (from Friday 22nd July until Tuesday 26 st July) MOL started to fall, losing approximately 8 percent since then as speculation of a bid by Austrian competitor OMV has been cooling off. We have been seeing heavy selling of the oil and gas refiner as there is speculation now that MOL will not be subject to a take-over from OMV at least for the short-term.
Hungary's government is drafting legislation that would allow it to block a possible takeover of oil and gas company Mol by its Austrian rival OMV. According to the Financial Times, Finance Minister Janos Veres said the Hungarian government is looking for ways to protect strategically industries such as MOL without violating European Union regulations. OMV already announced that they upped their stake to 18.6 percent from 10 percent. 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.
Elsewhere, OTP continued to outperform. Giant bank HSBC hiked its forecast on the Hungarian bank stock, giving the shares a new target price of 12,308 forints compared to 10,642 forints from its previous recommendation. HSBC said domestic political risk to the bank's growth targets had decreased. They also felt that the growth at its Russian subsidiary will be a key factor in delivering important future growth prospects. In addition, to these comments from HSBC’s analysts, Citigroup also mentioned OTP as one of their favorite picks within the CEEMEA areas.
Last week brought an unexpected rate decision from Hungary’s central bank: interest rates were cut by a quarter point to 7.75%. The decrease in interest rates was a surprise as the timing was a bit earlier but otherwise consistent with market expectations in terms of direction and measurement.
Hungary’s unexpected rate cut barely made the headlines given all the other excitement taking place with MOL’s story, which experienced record trading volumes as well as helped the Hungarian index (BUX) and OTP reach a record high last week.
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