Sanguinity Rules Among Fund Managers Over Hungarian Stocks

Currently, 62% of the respondents expect a larger than 15% rise in the BUX index in the next 12 months, and their short-term views are also rosy. 

In view of the splendid performance of MOL in the past days it is no wonder that twice as many fund managers named the oil stock as their top pick as a month ago, which propelled MOL to the top of the list, beating even OTP. Despite the upbeat projections, though, not many fund managers have started to over-represent Hungarian stocks compared to their own benchmark.

The contributors to the poll were: Adelphi Capital, Aegon, AXA, Berenberg, Buda-Cash, Budapest Fund Management, CIB, Citadella Consulting, Concorde, Credit Suisse, Dialóg, Equilor, Erste, K&H, MKB, OTP, Pioneer, QUAESTOR, Raiffeisen, RCM.

Fund managers polled by Portfolio.hu are buoyant about both the short-term and long-term prospects of the BUX index. A sweeping majority of the 21 respondents project a 5% plus rise in the index for the next three months. Their 12-m outlook is even rosier than that, with 62% of them seeing the BUX running up by more than 15% from the end-October 13,506-point benchmark value. 

The change in long-term views is most apparent compared to the outcome of our October survey. What is more important is that such massive optimism on a 12-m horizon has not been seen ever since the launch of the monthly poll in March 2004. It is also true, though, that the decline of last month also stands unprecedented.

Considering the 28% nosedive of the BUX index in October that came about as panic engulfed global stock markets, this kind of positive mood is not so much surprising. Moreover, investors were jittery about Hungary's weak macroeconomic stability. The EUR 20 bn credit line provided by the IMF, the EU and the World Bank, however, has eradicated the relative underperformance of the local bourse compared to its regional peers and as global mood started to improve, a positive correction began. 

Although global recession fears are now coupled with concerns about corporate profits, the fund managers project a substantial rise from end-October levels. The majority of them believe the time for panicky plunges could be over. 

On the list of top picks MOL advanced the most, garnering 12 mentions versus six in October. This means a lot of fund managers believe the oil stock could be the best vehicle to ride the rising waves on the BSE.

OTP also increased its appeal, but the nine votes it gathered was not enough to snatch the gold medal. The bank's stock has been battered by negative implications of the global financial crisis and local macroeconomic woes, and we cannot really say the professional investors would now sell their house to buy OTP shares.

Meanwhile, Richter garnered two more mentions than a month ago. The company's shares have traditionally been the most defensive stocks during times of great plunges. Magyar Telekom, which is to publish its Q3 earnings report on Thursday, failed to become more attractive from a month ago.

The fund managers' rose-coloured outlook does not clearly reflect in the representation of Hungarian stocks compared to their own benchmark, with most of them keeping the shares on market weight. The ratio of those over-representing the local papers compared to their own benchmark has also dropped from a month ago. Note, however, that the ratio of ‘underweighters' dropped to a mere 15%."

Source: Portfolio Online Financial Journal