Gov'nt Announcement Sends Hungarian Stocks Tumbling

The Budapest Stock Exchange's (BSE) share index, the BUX, closed at 38,644.57 points on Friday, down 7.50% or 3,134.91 points on the previous week. Although turnover rose from 68.31 billion forints the previous week to 132.69 billion forints, leading stocks weakened on the week, the state news agency MTI reported on Sunday morning.

Equilor Investment Plc. said in its summary that although international sentiment was positive in capital markets, the announcement by the Hungarian government on the imposition of the “extra profit tax” sent domestic stocks to the floor.

According to Equilor's calculations, the biggest extra tax will have to be paid by the gas and oil company Mol, for which the term extra profit really makes sense, because the spread between Brent and Urals oil has indeed increased significantly. OTP bank could pay an extra tax of around HUF 82.5 billion, while Magyar Telekom could pay HUF 15 billion this year and next. On the basis of the information available so far, Richter is not included in the taxable scope, they said.

Equilor recalled that the National Bank of Hungary Bank (MNB) may switch to a half-percent interest rate hike, while according to a statement by central bank vice-president Barnabás Virág, it may be appropriate to continue the tightening cycle at half the previous rate (100 basis points).

OTP's share price fell the most this week, by 13.87%, closing at HUF 8,530 forints on Friday, with weekly turnover exceeding HUF 95.77 billion.