Hungary’s central bank eyes control of bourse, state company IPOs

By bne IntelliNews October 21, 2015

Hungary’s central bank wants to take control of the Budapest Stock Exchange (BSE) and list shares of state-owned companies on the bourse, Deputy Governor Laszlo Windisch suggested on October 21.

A deal could be good news for the BSE, which has endured a tough few years. It's few listings have proved far from successful listings, while it has seen a series of delistings, over the last few years. 

Turnover has also been steadily eroding. The average daily equity turnover on the bourse shrank 17.9% in 2014, to leave it at HUF7.8bn (€25.1mn). It is the lowest figure in the past nine years.

The Magyar Nemzeti Bank (MNB) currently owns a 6.9% stake in the stock exchange. Austria's CEE Stock Exchange Group controls a 50.5% stake and Oesterreichische Kontrollbank AG holds 18.3%. Last month, reports suggested the MNB is in talks with the Austrian owners in a bid to increase its stake.

The BSE can operate efficiently if the largest operators - issuers or investment service providers - take part in the management of the market as owners, Windisch told pro-government daily Magyar Idok. Several steps are needed to achieve that, he added.

The listing of state-owned companies and the launch of programmes aimed at helping smaller companies gain access to funding via the stock exchange are necessary, he said. Power company MVM, gambling firm Szerencsejatek, and MKB Bank have been mentioned as potential IPO candidates.

Until now, the poor relationship between the government and the bourse virtually ruled out the floatation of state-owned companies, analysts at Portfolio.hu suggest.

“In a best case scenario we should see more listed companies, increased interest by investors, higher turnover, and more analyst coverage”, they forecast. At the same time, negotiations on any deal would likely be difficult, the analysts add.

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