Gedeon Richter Jumps Most in 2 Weeks on MSCI Bet: Budapest Mover

Gedeon Richter Nyrt. climbed the most in more than two weeks as VTB Capital Plc said the drugmaker’s shares may rejoin MSCI Inc.’s basket of Hungarian equities.

The stock rose 1.9 percent, the most since July 23, to 3,565 forint at the close in Budapest. Trading volume was 1.2 times the three-month average, data compiled by Bloomberg show. Richter may return to the MSCI Hungary Index in a November review, making it “likely” that Magyar Telekom Nyrt. will subsequently be removed, VTB said in an e-mailed note today.

Richter, Hungary’s biggest medicine-maker, was dropped by MSCI late last year due to low liquidity. The shares have gained less than 1 percent since the end of November, compared with an increase of 6.3 percent in the period for OAO Pharmstandard, the Russian manufacturer of pharmaceuticals. Trading in Richter’s shares surged last month, when the company carried out a 10-1 split in the stock’s face value.

“Gedeon Richter will return to the MSCI Hungary unless liquidity deteriorates again,” Ilya Piterskiy, a Moscow-based equity strategy analyst at VTB Capital, said in today’s note. “Once Gedeon Richter returns to the index, Magyar Telekom is likely to be excluded.”

While VTB doesn’t expect MSCI to make any changes to the MSCI EM Europe Index in its quarterly review on Aug. 14, amendments may be seen in the semi-annual review in November, VTB said. Hungary has a 2.3 percent weighting in the index with three stocks including Magyar, data compiled by Bloomberg show.

New Drugs

Sales in China and new drugs have improved the outlook for Richter, Peter Fazakas, a Budapest-based equity analyst at Buda-Cash Brokerhaz Zrt. brokerage said by phone. Richter “has very good chances of returning to the index,” he said.

Richter said last week second-quarter sales increased 9.5 percent, driven primarily by a boost in exports to Ukraine and strong revenue from China. The company kept its forecast for group-level sales, projecting an increase of three percent in euro terms this year.

About 354,086 Richter shares were traded daily on average in July, more than double that of the same period last year, data compiled by Bloomberg show.

Shares of Magyar Telekom were unchanged at 322 forint today. The stock, which has tumbled 18 percent since the end of November, last week sank to a record low on concern its 0.2 percent weighting in the emerging-Europe gauge will be cut in this month’s review.

To contact the reporter on this story: Marton Eder in Budapest at meder4@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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