Equity 2 September 2020, 10:28am

Wood takes the lead in Budapest bourse in August

Portfolio

There was a slight increase in turnover on the Budapest Stock Exchange in August compared to July but overall figures remained low as the earlier increased interest in stocks due to the coronavirus and the sharp decline in share prices has disappeared from the Hungarian bourse. Turnover stabilised below the pre-crisis level, far from the peaks seen in March and April. In the ranking of brokerages, Wood gained the lead with a 28% market share as the Czech-owned brokerage is taking an ever bigger bite of the shrinking pie while its Hungarian rivals keep losing ground.

However strange it may seem, the effect of the coronavirus on global stock markets has been positive overall. Stock indexes in the U.S. rose to new peaks in August as investors saw improving macroeconomic figures from China, a slow improvement in U.S. unemployment and the Fed’s communications. At a meeting earlier this week, Fed chairman Jerome Powell amended the inflation target and adopted a 2% average target that could be temporarily exceeded “if that means more Americans stay in and join the workforce,” Powell said. Investors welcomed the decision as it means a potential tightening is now off the table.

In August, investors were less concerned about the coronavirus pandemic, even though the situation is turning to the worse in several regions including Europe. Case numbers are rising in European countries and are nearing April levels. In contrast, the stock markets are dominated by a cheerful sentiment as the DAX rose nearly 6%, while overseas, the Nasdaq gained 11% and the S&P500 7%.

The Hungarian stock exchange continued to fall behind in August as the BUX index stagnated. OTP, the blue chip with the largest weight in the basket, lost 3.4% in August, while Mol fell 2.4% and Magyar Telekom stagnated, with only Richter performing well, gaining more than 7%. Among midcaps, Masterplast was the best performer, rising nearly 13%.

Turnover at the Budapest Stock Exchange rose slightly compared to July but remained in summer mode as it totalled a mere HUF 164 billion. As usual, OTP shares were traded the most, accounting for some 57% of total turnover. The bank continued to buy its own shares in large quantities last month, purchasing 920,000 treasury shares, and there were days when OTP’s transactions made up 23% of trade in its shares. Overall, OTP, Richter (21.4%) and Mol (14.9%) accounted for 93.6% of total turnover in the BSE.

In the brokerage ranking, Wood took the lead in August, with the Czech broker securing 28% of all trades last month, followed by Erste with 24.4% and Concorde with 20.3%. Customers of the three leading brokerages accounted for nearly 73% of total turnover in August.

Hungary levied a special tax on investment service providers during the 2008 financial crisis that has remained in place ever since. Foreign-based brokerages operating in Hungary are not subject to this tax, which puts domestic players at a disadvantage, and it shows in the rankings.