Magyar Telekom Rally on Tax Revamp Pushes BUX Index Above 20,000

Updated on

Magyar Telekom Nyrt. rose the most in more than six years, helping push Hungary’s benchmark stock index above 20,000 points, as the government said it may review a tax on telecommunications companies.

The former telephone monopoly climbed 7.2 percent, the most since October 2008, after Economy Minister Mihaly Varga said the government may review a levy on phone calls and text messages as economic growth stabilizes. The stock led gains in the BUX, which rallied 2.9 percent in Budapest to close above 20,000 points for the first time since August 2011.

The levy is among measures introduced by Viktor Orban’s government since 2010 that were criticized by international organizations, including the European Union, and helped push Hungary’s credit rating into junk status. In addition to reconsidering the phone tax, the government last month vowed to lower a similar levy on banks in 2016.

“Based on the recent review of the bank levy, it could be a significant relief,” Endre Kosa, an economist at KBC Groep NV’s Budapest-based brokerage, said by phone. “Telecom and utility taxes paid by Magyar Telekom reached 33.5 billion forint in the past couple of years, which translates into a tax burden of 32-33 forint per share,” he said.

About 6.5 million Magyar Telekom shares were traded, or almost six times the three-month daily average. The forint gained 0.1 percent to 298.85 per euro, the strongest in 14 months.

Standard & Poor’s raised Hungary one step to BB+ on March 20, the highest junk rating, citing the country’s reduced vulnerability and “policy adjustments” that lowered the risk of banks cutting their loan stock.