The Budapest Stock Exchange has approved a new strategy, the Hungarian bourse announced on March 9. The plan for 2016-2020 aims to reawaken a sleepwalking bourse, which the Magyar Nemzeti Bank (central bank) bought full control of from regional exchange operator CEESEG in November.
Although it put in a world-leading performance with a gain of close to 30% in 2015, the BUX index is utterly dominated by three or four stocks and turnover has dropped in recent years.
"Right now the most pressing task is to help successful listings by having companies go public that meet the high quality standards required to strengthen investor confidence," the BSE said in a statement. The bourse had only 35 new entrants in the past 15 years and experienced a 70% drop in trading volumes between 2010 and 2014.
MKB Bank and Budapest Bank – bought by the state over the past couple of years - are widely expected to lead the charge by launching IPOs this year or next. Other state-owned candidates for listing on the bourse include the national lottery, Hungarian Post and perhaps power group MVM.
"We want market markers," Balazs Bozsik, marketing director at the BSE told bne IntelliNews earlier this month. He adds that the bourse is eyeing 30 state-companies for potential IPOs over the next five years. That, the exchange hopes, will open the way for development of a thriving market for larger privately owned Hungarian companies - road hauler Weberer and realtor Duna House are thought the prime candidates – as well as numerous small and medium sized enterprises.
This year, the MNB is building the regulatory framework to improve the listing process and support Hungarian companies coming to the market, Marton Nagy, vice governor of the MNB and chairman of the BSE, told bne IntelliNews. Boosting total market capitalisation to 30% of GDP from the current 15% or so is vital to the development of the economy, he insists.
The strategy is clearly aware of previous issues noted by analysts that Hungarian IPOs have tended to be overpriced. "It is also important that listings take place at pricing levels that provide room for future price increases," the statement adds.
The bourse, in which the central bank acquired a controlling stake last year, will aim to boost the number of large liquid shares and use European Union funds to develop the capital market in close cooperation with the government, the BSE says. The strategy document backs up Nagy's ambition to see at least five IPOs per year between 2016 and 2020.
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