Hungarian Stocks Decline to Two-Week Low on Egyptian Protests

Hungarian stocks fell to the lowest in two weeks as protests in Egypt reduced investors’ appetite for emerging-market assets.

The benchmark BUX index retreated 0.6 percent to 22,709.35 by the 5:06 p.m. close in Budapest, the lowest closing level since Jan. 17, led by Magyar Telekom Nyrt., the country’s former phone monopoly, which declined 2.2 percent. The forint reversed losses of as much as 0.6 percent and traded 0.1 percent stronger at 272.81 per euro.

“Investors are worried that if Hosni Mubarak is forced to resign, another wave of risk aversion may start on markets,” Buda-Cash Brokerhaz Zrt. analysts Peter Deaki and Zsigmond Gelencser wrote in a note today, referring to the Egyptian president.

Emerging-market stocks fell, dragging the benchmark index to a six-week low, as Egypt’s political crisis prompted investors to reduce risk. Protesters defied a curfew and demonstrations against President Mubarak spilled into a second week, increasing concern that the unrest will destabilize the Middle East.

“Investors tend to give emerging markets a uniform treatment, even though central European economies aren’t directly interlinked with Egypt’s,” Commerzbank AG analysts led by Peter Karsai wrote in a note today.

Hungarian stocks gained 6.5 percent in January, their biggest monthly gain since March. The forint, which was the worst-performing emerging-market currency in 2010, appreciated 2.1 percent this month, the biggest monthly rally since September, as government plans to cut debt boosted investor confidence in the country’s assets.

Budget Savings

The Cabinet plans to make budget savings that will reach as much as 650 billion forint ($3.2 billion) a year in 2013, Economy Minister Gyorgy Matolcsy told reporters last week. The measures will be approved on Feb. 28, according to Matolcsy.

“The government is due to reveal its fiscal plans next month and we are generally constructive on this forint,” BNP Paribas SA analysts led by Paul Mortimer-Lee in London wrote in a note today.

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