Hungarian shares and the forint, which have performed badly compared with regional peers, may do better after a government pledge not to impose more losses on banks unilaterally, brokerage Equilor Befektetesi Zrt. said.
Hungary’s BUX stock index fell 8 percent through yesterday since Sept. 9, when the ruling Fidesz party proposed to allow early repayment of mortgages denominated in Swiss francs at below-market rates. Such mortgages account for two thirds of the total and lenders are taking losses as a result of the step. Poland’s WIG20 index has gained 1.3 percent in the period.
The government is working with lenders on further “joint” solutions to alleviate the burden of foreign-exchange loans on households, Economy Minister Gyorgy Matolcsy said yesterday in a press conference. Domestic banks have turned to the Constitutional Court and the European Union has said the early-repayment plan may breach its rules.
“The minister took a more conciliatory tone at yesterday’s press conference on the banking sector,” Akos Kuti, the Budapest-based head of research at Equilor, wrote in a research report today. “The underperformance of Hungarian assets, such as the forint, bonds and equities, may diminish in coming weeks because of the positive signals.”
Banks have booked losses of more than 33 billion forint ($151 million) on repayments under the government plan and that figure may rise by another 71 billion forint, based on indications given so far, Karoly Szasz, the chairman of financial regulator PSZAF, said at Matolcsy’s press conference.
OTP Bank Nyrt., Hungary’s biggest lender, rose 1.4 percent by 9:39 a.m. in Budapest, paring losses in the second half of 2011 to 45 percent. The BUX rose 1.4 percent and Poland’s WIG20 fell 0.3 percent.
The forint depreciated 0.4 percent to 304.6 per euro, extending its decline in the second half of the year to 12.7 percent, the most among more than 20 emerging-market currencies tracked by Bloomberg.
OTP competes mostly with units of international banks including Erste Group Bank AG, Raiffeisen Bank International AG, UniCredit SpA, Bayerische Landesbank AG, KBC Groep NV, and Intesa Sanpaolo SpA.