Sept. 22 (Bloomberg) -- OTP Bank Nyrt., Hungary’s largest lender, declined the most in six weeks on concern Hungary’s economic recovery will be hurt by a global slowdown and the government’s economic policies.
The shares sank 11 percent to 2,995 forint by the 5 p.m. end of trade in Budapest, after a suspension for breaching the 10 percent intraday trading limit, the biggest drop since Aug. 10. OTP extended its slump this quarter to 50 percent. The benchmark BUX index, in which OTP has a 25 percent weighting, fell 6 percent.
“Investors have become less confident about the macroeconomic outlook for the coming years,” Akos Kuti, head of research at Equilor Befektetesi Zrt. in Budapest, said in a telephone interview. “The coup de grace came from the Fed which emphasized that it also sees huge risks in the financial sector.”
Emerging-market stocks and bonds fell after the Federal Reserve said yesterday the U.S. economy faces “significant downside risks.” Hungary’s economy may grow 1 percent next year, compared with an earlier estimate of 1.5 percent, the Magyar Nemzeti Bank said today in a report.
“The tax policy changes announced daily are making it increasingly difficult to appraise the outlook,” Kuti said.
The government is seeking 750 billion forint ($3.5 billion) in budget savings next year including an increase in the value-added tax rate to a European Union-high of 27 percent from 25 percent. It is also proposing a “temporary” levy on higher earners, the Economy Ministry said in a statement on Sept. 20.
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