Equity 13 May 2019, 3:37pm

Hungarian fund managers divided over Mol

Portfolio

Benchmark stock indices rose on both sides of the Atlantic Ocean. The general index of the Budapest Stock Exchange (BSE) reached a new all-time high amidst the buoyant sentiment, although its momentum faded in the last week of April. Portfolio’s latest survey reveals that the majority of local fund managers expect only a moderate shift in the index in the next 12 months. They are divided over the outlook on energy group Mol, while midcaps remain as popular as ever, with Alteo and ANY Biztonsági Nyomda garnering most mentions as top picks this month.

The following fund management companies contributed to our poll: Accorde Fund Management, Allianz, CIB Fund Management, Dialóg, Diófa, Erste Fund Management, Equilor, Generali, Hold Fund Management, K&H Fund Management, OTP Fund Management.

Key stock exchange indices rose both in Europe and overseas. Sentiment remained favourable on the back of positive expectations regarding a trade agreement between the USA and China. The BSE also went higher and reached a new all-time high at the end of April. Its momentum, however, faded in the last week and the BUX index turned down.

78% of fund managers polled by Portfolio expect to see the BUX index +/-5% compared to the reference value three months from now. 11% of them project the index to be either up 5-15% or down 5-15% by the end of July. On a 12-month horizon, 67% of respondent project the index to be +/-5% from the reference value, while 22% of them believe the index will be up 5-15% by then. A small share of the local fund managers remain pessimistic, forecasting that the index could be down 5-15% a year from now.

The composite index comprising all estimates for three months forward shows now change compared to a month ago, with 78% of the fund managers projecting the index to be either up or down 5%, while only 11% of them believe the index will have gained 5-15% by then. Another 11% think that three months from now the general index will be 5-15% lower.

The composite index comprising every forecast for 12 months forward is also the same as a month ago. 67% of the market project the BUX index to be +/-5% from the reference value a year from now, while 22% projects a 5-15% rise and 11% a 5-15% drop in the index.

Among the blue chips, Richter and Mol both garnered three mentions as top picks. Although Mol’s first-quarter figures were overall not as good as expected, the energy group put its Q1 results on the table after weathering a relatively unfavourable market environment, as oil prices fluctuated heavily and refining margins fell to multi-year lows. Local fund managers still see an upside potential in the oil stock. It is also is favour of the company that its restructuring strategy announced in 2016 and spanning to 2023 has been progressing well that is reducing the group’s expansion to the energy market. Richter also collected three mentions as a top pick. Some of the fund managers probably think that after a year sprinkled with sandals and negative turns of events, things will finally turn for the better for Hungary’s leading drugs producer in 2019. Magyar Telekom and OTP shares received two mentions each in the top pick category.

Among the midcaps, Alteo remains highly popular, with three mentions as top pick. The company’s appeal may be linked to the fact that it carried out capital increase via private placement in March, essentially launching a new investment programme, in which the recently announced wind turbine acquisition could be the first major step. Thanks to the purchase, Alteo’s renewables portfolio - including the solar park developments in progress - is larger than 55 MW and including a 50 MW natural gas-fuelled power plant capacity, its power producing capacity will be over 105 MW, a significant jump for the group.

Three fund managers ticked off printing house ANY Biztonsági Nyomda as their top pick this month. The popularity of the company may be related to the positive growth outlook, as well as the fact that its 6% dividend yield is one of the highest among listed companies.

As for the least-favoured stocks, Mol garnered four mentions this month, which may have to do with the fact that its Q1 earnings report showed worse results than what the market expected. Magyar Telekom and Richter both had two mentions, and among midcaps, 4iG, Appeninn, Konzum, Opus and BIF shares all garnered two mentions each in this category.