World-Beating Stocks Rally Shows Return of Confidence in Hungary

  • Benchmark BUX index set for 11 percent advance as Poland falls
  • Gains in OTP Bank, Richter and Mol fuel rally in Budapest

Hungarian stocks rallied the most worldwide this month as improving earnings prospects for the nation’s biggest companies lured investors.

The BUX index gained 11 percent in November, led by Gedeon Richter Nyrt., which has jumped almost 30 percent since it secured U.S. Food and Drug Administration approval in September to market its Cariprazine anti-psychotic drug to Americans. The BUX advance was also driven by Premier Viktor Orban’s pledge to cut bank taxes. OTP Bank, the country’s largest lender, jumped the most since April.

“There’s positive news for all major companies," said Andras Pinter, a money manager who helps oversee the equivalent of $1.8 billion in assets at Budapest Alapkezelo and has a neutral weighting on Hungarian stocks. "This is the rejuvenation of a very marginalized market that has been forgotten by many institutional investors."

Trading volume was the biggest in seven months as the BUX outperformed regional peers including Poland’s WIG20 Index, which declined 6 percent this month. Hungary’s investment outlook has improved as Orban, who seeks to regain the country’s investment-grade status, introduced policies to cut Europe’s highest bank tax. The central bank has also sought to boost share sales on the market. Fitch Ratings kept the country at BB+, the highest junk rating, with a positive outlook on Nov. 20.

Shifting Investments

The BUX rose 0.9 percent by 4:11 p.m. in Budapest. Hungarian stocks may continue to rally more than Polish equities in December, according to Equilor Befektetesi Zrt. brokerage in Budapest. Equilor said some investors are shifting to Hungary as a newly elected government in Warsaw plans to introduce a tax on bank assets and convert foreign-currency loans.

"While investors will continue to sell Polish stocks into the new year when a new central bank leadership will be appointed and the loan switch is finalized, December has traditionally been a strong month for Hungary," Monika Kiss, the head of research at Equilor, said by e-mail.

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