7days, 2004. december 13

7/28/2019 7Days, 2004. december 13.

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1051 Budapest, Hercegprímás utca 19 Tel: 354 3290 Fax: 354 0130 Mail: [email protected]

07 December 2004

Business OTP pipped at the post in Jubanka bidLidl faces pricing accusationsMOL to reduce pump pricesPSzÁF allows increase in IC Bank stakeMTV resorts to loan for liquidityGriff clothes look to expand globallyCompany registration easier over InternetFresh mineral water enters HungaryFines levied for disregarding work safetySubsidies for IT from next year Matáv leaps to center ground in BSETeleworking in Hungary needs developingMNB: Hungary must cut budget gap to reduce debt

MFB to pay government Ft 8 bln dividendEconomics Number of retail outlets slightly up in Q3Effect of high interest rateHungary exploits EU funding well, says minister Real-estate sluggish, set to awaken next year FinMin, KSH announce deficit calculation change

Politics ForMin: vote will improve ties with neighborsDomestic Layoffs in Defense Ministry

Prison to be built in TatabányaStockwatch BUX Close: 14,398.24 Change: +83.64 (+0.58%)Exchange Fixed Middle Rate

Weather Tomorrow: p/cloudy

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7/28/2019 7Days, 2004. december 13.



08 December 2004

Business Rába lands order from Russian TrolzaWellness center in western HungaryCetelem Q3 resultsSuzuki recalls 1.3-litre Wagon R+ modelsPlane Station turns airstrip into airportMalév could end year in black, or redRetail outlet center opens in TörökbálintDefense Min purchases missilesRegulator orders Heineken to correct Brau bidBorsodi cuts staff Dataplex optimistic about year-endStyl clothes co’ sheds real estatePhylaxia unveils pet plans

Multi-entertainment units made by computer co’ AgMin’s marketing company to get bigger budgetInvestors buy historic Danube building: Ft 4 billion

Economics Preliminary November fiscal deficit Ft 106.5 billionIndustrial output up adj. 8.4% yr/yr in October

Politics Fraud cases at referendum complaints rebuffedEthnic Hungarians may hand back entitlement cards

Domestic Naturalization process under scrutinyRichest people in HungaryFormer MTV president to be chargedSerbian Hungarian man flees to Hungary

Stockwatch BUX Close: at 14,417.01, Change: +18.77 (+0.13%)Exchange Fixed Middle RateWeather Tomorrow: p/cloudy

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09 December 2004

Business T-Mobile, Telenor win 3G LicensesOTP gets Nova Banka stake for Euro 236 mlnBÁV begins listing prices for goldBiggeorge's renamed Eston International Audi to invest Euro 1 bln over 5 yrsGraphisoft buys own sharesNew Getronics CEOTender announced for design center Walt Disney opens center in BudapestKafijat sells stake in Antenna

Economics Oct. trade deficit est. Euro 390 mlnExpansion in auditing marketGrowth of monetary base accelerates in Nov

APEH to get fewer than expected premiumsGov't grants to aid companies to doubleHotel occupancy upGov't to launch agricultural loan program17.9 mln transactions with MastercardValue of homes falling because of glutHungarian banks "still inefficient" AgriMin comments on forint rate AKK mandates USD 100 mln 2-yr bond issue

Politics "State security documents should be published"Ethnic Hungarians plan conference

Domestic Construction of new metro line beginsStockwatch BUX index: BUX Close: 14429.99 Change: +12.98; ( +0.09%)Exchange Fixed Middle RateWeather Tomorrow: p/cloudy

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10 December 2004

Business K&H Bank's 9-month net profit up 31%Keravill goes into liquidationEuro 13.5 mln plant addition completedForlev increases stake in KonzumReal estate fund goes publicSW Umwelttechnik to double productionBKV to increase tariffsMVM sells excess capacity at auctionDiscount airline carry tourism boomSzéles re-electedNew ÁPV head to be appointedNew logistics center for KecskemétBalaton Airport license awarded

Economics PM takes stance against strong forintEU tender process moving slowly APEH introduces new service Auth warns of banks' risk on forex Alliance of CE bourses plannedPublic procurement at record high Agri producer prices down 9.9% in Oct.Q3 growth driven by agriculture

Politics Monetary policy fight weakens forintDraskovics Says He Won't Be Fired

Domestic 400 yrs of French painting on show in Bp

Stockwatch BUX index: BUX Close: 14345.36 Change: -84.63; (-0.59%)Exchange Fixed Middle RateWeather Tomorrow: sunny

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7/28/2019 7Days, 2004. december 13.



07 December 2004BusinessOTP pipped at the post in Jubanka bid

As expected, Serbia-Montenegro’s bank privatization authority has officially announced that it hasaccepted a bid by Alpha Bank of Greece for an 88.64% stake in Jubanka. Bids submitted by Alpha

Bank and OTP Bank Rt were evaluated on the basis of purchase price and development strategies,including plans to keep the bank’s employees, according to the statement published yesterday. AlphaBank will be invited to negotiate the sale contract. If negotiations are unsuccessful, the Serbianauthorities will offer to negotiate with OTP. OTP Bank expected to be informed by the weekend onwhether its bid for Serbia’s Jubanka had been accepted, but it has received no official word, OTP Bankofficials said yesterday. (Econews; Vg1, Nv 6, Nb 16, NG 11)Lidl faces pricing accusations

The supervision division of the Pest County Agricultural Office initiates an inspection against Hungary’snewest retail chain Lidl Kft today following a list of complaints from producers and manufacturersagainst Lidl’s price strategy. Since Lidl first opened in mid-November, rival producers have beenaccusing it of selling goods below the wholesale price. György Vámos, president of the Hungarian

Trade Association, said that in case of imported goods it is hard to trace the wholesale price. Whilecabbage-growers were distributing free cabbages in front of the Dunaharaszti Lidl in protest last Friday,the Consumer Protection Office has also started an examination on claims that there is not adequateinformation given on packages of products sold by Lidl. (NG 1) R.G.MOL to reduce pump prices

Hungarian oil and gas company MOL Rt, the country’s major distributor of fuel, will reduce retail petrolprices by Ft 6/litre and the retail price of diesel by Ft 8/litre on December 8, a MOL spokesman saidyesterday. MOL said the new price would be Ft 237.5/litre for 95-octane unleaded and Ft 230/litre for diesel. Explaining the measure, MOL cited a decline in international crude oil prices over the past week.(MTI; MH 3, NG 3, Vg 5, Nv 6, )PSzÁF allows increase in IC Bank stake

The State Financial Institution Supervision (PSzÁF) has given its consent to Switzerland-based ICBFinancial Group Holdings Ltd to increase its stake by 15% in IC Bank. ICB Financial Group Holding hasheld a 20% stake in the bank since September, when it increased the bank’s registered capital to Ft24,105 billion. Besides ICB Holdings, 6 other owners hold 10-14% stakes in the bank respectively. (NG5) R.G.MTV resorts to loan for liquidity

MTV is to take a bank loan to solve its liquidity problems, according to Népszava. If approved by thepresidential committee, the media complex would take a Ft 4 billion credit to even out its 2004 dues.The public channel called for a tender, the winner is to be contracted, and the terms and conditions willbe negotiated at today’s meeting. (Nv 3) E.C.Griff clothes look to expand globally

After successfully offloading its various construction and furniture industry holdings, men’s clothingmaker Griff Gentlemen’s Rt is set to go global by opening a first store in Poland next year and a couplemore in China later on, chairman and CEO Zoltán Süto said. The decision was prompted by thesluggish domestic market, which is beginning to take its toll on sales, Süto added saying that thecompany is also leasing out its central store in Nyugati tér to move to a cheaper shopping mall. Giff lastyear made a profit of Ft 190 million on revenues of Ft 2.4 billion. (Vg 1) S.F.

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Company registration easier over Internet

Company registration over the Internet is soon to come, since the Ministry of Justice is starting todigitalize existing hard copy registrations from January 2005. From January 2006, yearly companyreports may be filed via Internet, from September 2006, MJ will accept company registrationrequisitions, and from 2007, all company documents should be available via Internet. State

commissioner Miklós Hankó Faragó said that the usage of online tools is being promoted by a reducedprice for the online services compared to the traditional method. There will be a total of Ft 500 millionspent on developing the system, which is expected to reduce and end queuing at the office. Accordingto the new bill on corporate law, the 60 and 30-day registration period of Rt’s and Kft’s respectively maybe halved. (Nb 8) E.C.

Graphisoft replaces head of FM business Architectural and building management software developer Graphisoft Kft announced that WolfgangReinecke will replace Gábor Dióssy as head of the company’s Facility Management (FM) business asof January 3, 2005. Mr Reinecke earlier led Graphisoft’s FM arm in Germany and has a deepunderstanding of the market. (Econews; NG 11)Fresh mineral water enters Hungary

Fonte Verde Kft will start the production of a new mineral water brand called Fonte Verde in its recentlycompleted Somogyvár plant in southwestern Hungary in mid-December, announced NárciszCsákabonyi, the company’s managing director. The company has realized investments worth Ft 500million, having recently completed a 2,000 sqm plant, a 500 sqm office building and a logistics center.Next year the company also wants to enter the Swedish market and Arab countries with its products.(NG 5) R.G.Fines levied for disregarding work safety

Last year Kft’s (limited companies) were by far the most notorious violators of occupational safetyregulations, paying total fines of Ft 465 million, the National Labor Affairs and Labor Safety Supervision(OMMF) said in a government-commissioned report. This makes up 53% of the total penalties levied oncompanies for labor safety-related irregularities in 2003. Apart from the 927 Kft’s, 290 Bt’s (limitedpartnerships), 288 sole proprietors and 98 Rt’s (stock companies) got the official rap on the sameaccount. (Vg 6) S.F.Subsidies for IT from next year

Tender publications for EU subsidies for IT developments will be issued in January and applicationscan be submitted from February, announced Sándor Kisgergely, managing director of IT Kht, anassociation created by the IT Ministry to handle major IT projects and tenders. Between 2004 and 2006Ft 35 billion is available for IT developments and applications have been submitted for Ft 27 billion sofar. The amount of IT subsidies will considerably increase from 2007 in scope of the 2nd NationalDevelopment Plan. Kisgergely also added that IT Kht suggested some changes in applicationprocedures in order to make application easier for SMEs in the future. (NG 4) R.G.Matáv leaps to center ground in BSE

Budapest shares closed at an all-time closing high yesterday, but most investors took to the wings amid

a dearth of corporate or economic news. The failure of retail bank OTP Rt’s bid in Serbia hit the share’sprice, if only moderately, while telecom Matáv Rt surged to 6-week highs. The BUX index rose 83.64points, or 0.58%, at 14,398.24 points, which is a new all-time closing record. But the gain was solelydue to some robust last-minute buying boosting the price of Matáv, fuels group MOL Rt and mortgagebank FHB Rt - for the biggest part of the session the BUX seesawed around the flat-line. Turnover wasa measly Ft 6.8 billion (EUR 27.6m), with OTP posting around half of its recent average volume andMOL around 20% of its 30-day average. However, Matav bucked the trend as around twice as many of its shares were exchanged as on an average day in November. (Econews)

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Teleworking in Hungary needs developing

Hungary has a lot of catching up to do to make teleworking more accessible to employees since it hasonly 2-3% of its active labor force working from home, compared to the EU’s 15%, Gábor Simon, headof the Teleworking Council said prior to the upcoming 3rd National Teleworking Conference held onThursday. Some Ft 800 million will be earmarked from the labor market fund next year, which will all go

toward creating teleworking jobs, Simon added. In the past 3 years, some 2,500 new jobs of this kindhave sprung up through the help of state funding. (Vg 8) S.F.MNB: Hungary must cut budget gap to reduce debt

Hungarian Prime Minister Ferenc Gyurcsány’s government must reduce the country’s budget deficit toput a halt to rising debt as it works toward adopting the euro by the end of the decade, the central banksaid. Delays in trimming the budget deficit are the biggest threat to the country as inflation risk hasdecreased and money markets are stable, the bank said in a faxed statement yesterday. Hungary aimsto adopt the euro in 2010. It has to keep its debt at less than 60% of gross domestic product and pushits budget deficit to below 3% of GDP to switch to the common currency. Rising deficits led toincreasing debt, the bank said. „The country has a high need for outside financing in an internationalcomparison, which has primarily been provided by debt- type instruments since 2002,” the bank said inits report. (Bloomberg; NG 3, Vg 4, MH 11)MFB to pay government Ft 8 bln dividend

The Hungarian Development Bank (MFB) Rt will pay a Ft 8 billion dividend to the state this year, CEOSándor Czirják announced yesterday. The bank has not been paying a dividend over the last few years,but, under an amendment to the law governing it, MFB is now able to pay half of its net profit as adividend. The government ordered payment of an advance dividend of Ft 850 million in June and afurther Ft 1.65 billion in July. The bank was ordered to pay another Ft 3.5 billion after the third quarter.MFB expects to end the year with net profits of Ft 5.6 billion. MFB projects pre-tax profit of Ft 12.136billion and total assets of Ft 600 billion. (Econews; Nb 16)EconomicsNumber of retail outlets slightly up in Q3

There were 165,423 retail outlets in Hungary at the end of September, up 0.1% in Q3 alone and up0.6% yr/yr, the Central Statistics Office (KSH) reported yesterday. Around 18,400 new outlets openedand 18,200 closed in Q3. Around 43% of the retail outlets were one-man operations. The number of shops selling FMCGs fell 0.3% in Q3 to 49,875, and the number of shops selling non-food items rose0.3% to 104,690. The number of vehicle and parts dealers rose 0.7% from the end of June to 8,705 andthe number of filling stations increased 0.6% to 2,153. Around 170,000 square meters of retail spacewas built in January-September 2004, almost 75% was built in central Hungary and more than 70% of new retail space opened in Q3. (Econews; Vg 4)Effect of high interest rate

Hungary’s high benchmark interest rate has a three-pronged impact on company’s borrowings andinvestments depending on size and the extent of foreign ownership, according to a recently publishedsurvey of MKIK-GVI, the Institute for Economic and Entrepreneurial Research. Firstly, businesses,

particularly those smaller in size, are increasingly turning to foreign currency loans. Secondly, thehigher base rate discourages companies’ current asset borrowings. It also hampers investments, againaffecting primarily smaller businesses. (Vg 4) S.F.Hungary exploits EU funding well, says minister

Hungary has made good progress in utilizing European Union development funds when compared toother European Union member states, the minister in charge of European affairs said on Saturday.Etele Baráth said the competition and evaluation procedures put in place only a few months ago toallocate the structural funds the European Union commits to smooth out development gaps across the25-member bloc are working well, and the initial problems have been mostly overcome. Although somepayments related to development projects already completed will be deferred to next year, Hungary’soverall EU balance will show a surplus of Ft 70-80 billion in 2004, he said. (Econews)

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Real-estate sluggish, set to awaken next year

According to the report of ECOSTAT Institute for Economic Analysis and Informatics, the real estatemarket has been stagnating in Q3. The number of new apartments built in H1 2005 is to be significantlyless than in H1 2004. Next year a 7-11% rise in price expected, put down to the growing land andconstruction material prices. Apartments in county capitals and other major cities are to experience the

most significant increase in price; however, the same tendency is expected in the suburbs of Budapest.The willingness of people to build a home is expected to drop in the next six months, with most wantingto buy it ready. Companies, however, are increasingly willing to invest and construct. Some 31% of those surveyed are planning on renovating their homes. (Nv 12) E.C.FinMin, KSH announce deficit calculation change

Hungary will subtract revenue of private pension funds from the general government deficit under anew method of calculation, the Central Statistics Office (KSH) and the Finance Ministry said in a jointstatement yesterday. The new method of calculation, which will also add private pension fundsexpenditures to the deficit, will narrow the gap significantly. The EU statistics office, Eurostat, gaveHungary permission to use the method until March 1, 2007. Although allowing Hungary to compare itsdeficit with other countries in the region which are carrying out pension reforms, the figures have nobearing on whether Hungary meets criteria for joining the ERMII and later adopting the euro. (Econews;

NG 3, Nv 6)PoliticsForMin: vote will improve ties with neighbors

The relationship between Hungary and its eastern European neighbors will improve following thecountry’s unsuccessful referendum on granting preferential citizenship to ethnic kin, Foreign Minister Ferenc Somogyi said yesterday. In an interview with Reuters news agency, the minister said theHungarian government, which had opposed the initiative, was now given an opportunity to supportethnic Hungarian communities abroad in practical ways. (MTI)DomesticLayoffs in Defense Ministry

Defense Minister Ferenc Juhász announced that the Ministry is planning large-scale layoffs at itsbiggest armaments company HM Electronics and Logistics Rt (HM El) and has decided to reorganizethe company into a holding. He denied however, that the Ministry would want to privatize HM El. TheMinistry still wants to sell three other companies, HM Armcom, HM Arzenál and HM Currus but will notcomplete the procedure during the current term. (NG 5) R.G.Prison to be built in Tatabánya

Tatabánya municipality has theoretically approved the construction of a 300-people capacity detentionhouse. The construction is justified by the fact that the county police, county prosecutor, and the countycourt operate in Tatabánya. With the closest prison in Esztergom, the new institution will benefit thecommunity by saving having to transport those apprehended in Tatabánya back and forth. The complexis to be constructed on a 6-acre plot on the outskirts of the city. Mayor János Bencsik said that theinternational statistics state that crime is 20-30% lower in the surroundings of detention houses. The jail

will provide the city with 200-250 jobs. (Nb 10) E.C.StocksBUX Close: 14,398.24 Change: +83.64 (+0.58%)

Stock Closing price Daily change (%) Average price VolumeMOL 12,450 0.4 12,401 78,255Matáv 815 2.4 806 1,954,451OTP 5,395 -0.4 5,358 485,937Budapest Stock Exchange

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Regulator orders Heineken to correct Brau bidThe financial market regulator PSzÁF yesterday ordered the Dutch beverages group Heineken to supply moreinformation on how it arrived at a disputed public buyout bid price it offered to minority shareholders in October this year after buying majority stakes in the brewery Brau Union Hungária Rt. The regulator instructed BrauImmobilien GmbH, a Heineken subsidiary bidding to buy out minority shareholders holding 6.8% of Brau UnionHungária’s voting rights, to change the Euro/Ft cross rate it used to arrive at its bid price of Ft 16,362/share, and

ordered the bidder to supply more details on the discounted cash-flow (DCF) method it used in valuing theHungarian beer producer. (Econews; NG 11, MH 12, Vg 17)

Borsodi cuts staff Borsodi Brewery Rt is going to lay off 48 of its 650 workers in a month. The reason for the decision was theincreasing inflow of cheap imported canned beers. A few months ago the cheapest beers cost over Ft 100; now abeer can be had for Ft 49, causing the company to lose its market share. Around 12 employees will go intoretirement, and the rest will be helped to find another job. (Vg 15) G.R.

Dataplex optimistic about year-endIT infrastructure-outsourcing company Dataplex Rt expects to double its turnover this year reaching Ft 700 million,general manager Gábor Szabó said. Next year’s plans include turnover of over Ft 1 billion. In Q1 2004 thecompany had its first positive EBITDA of Ft 19.7 million, the whole-year figure is expected to be over Ft 100million. Dataplex offers storage for companies’ mission-critical IT infrastructure, and belongs to the company

group of drug maker Béres Rt. (Vg 15) G.R.Styl clothes co’ sheds real estateBeleaguered clothing manufacturer Styl Rt said it has sold 60% of all its real estate assets for a combined Ft 560million, which it will use entirely to pay up its Ft 600 million debt load. The buildings were sold Ft 140 million abovetheir book value. Styl is due to hold an EGM next week, which will review the company’s year-to-date figures andselect new supervisory board members. In its semi-annual report, Styl posted losses in excess of Ft 200 million.(NG 11) S.F.

Phylaxia unveils pet plans At its yesterday EGM, veterinary drug maker Phylaxia-Pharma Rt unveiled to shareholders plans for thecompany’s mid-term strategy. The meeting underlined management’s intent to plug into the more lucrative marketof developing pet drugs, primarily through acquisitions. To this end, Phylaxia said it is currently in talks to buy outan as yet unnamed peer, which generates annual revenues of over Ft 1 million. The EGM also stressed that more

site development, production concentration and R&D are need to ensure Phylaxia’s future expansion. (NG 11)S.F.

Multi-entertainment units made by computer co’Hungarian computer maker Albacomp Rt will offer two new entertainment PC’s from next year. The „digitalhome’s central units” are designed to replace computer, television and other home entertainment appliances suchas DVD players. The new products will be assembled at the company’s Székesfehérvár plant, vice-CEO CsabaDeme said. Albacomp plans to sell only a few hundred of the new products next year, but expects the market toboom within a few years, based on the expansion of broadband internet usage, he added. Albacomp Rt hadturnover of Ft 13.1 billion while the whole company group had turnover of Ft 18 billion in 2003. (Vg 16) G.R.

AgMin’s marketing company to get bigger budgetHungary’s Agriculture Marketing Center (AMC), run by the Ministry of Agriculture and Rural Development topromote Hungarian food products in Hungary as well as in Germany, Russia and neighboring countries, will have

a budget of about Ft 3 billion next year, almost double its budget in 2004. Because of budget cuts, the companyhad just Ft 1.6 billion to work with this year, Ft 400 million less than in 2003. AMC was forced to close its regionaloffices because of the lack of funding this year, Managing director Barnabás Kovács told MTI. (Econews)

Investors buy historic Danube building: Ft 4 billionÖkocentrum Rt has sold the „Lánchíd Palace”, a 7,800-sqm building next to Budapest’s chain bridge on the Budaside to investors Ákos Bacsai-Nagy and Zoltán Vincze for Ft 4 billion, business news portal NAPIonline reportedyesterday. The two men will soon be joined in the investment with Sirabel, a company registered in Switzerland.The historic building, which was designed by Miklós Ybl, one of Hungary’s most famous architects, will be turnedinto a luxury office building at a total cost of Ft 4 billion. (Econews)

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EconomicsPreliminary November fiscal deficit Ft 106.5 billionHungary’s fiscal deficit was Ft 106.5 billion in November after hitting Ft 44.4 billion in October, the FinanceMinistry announced late yesterday. The GFS-calculated figure, excluding local governments, compares with theministry’s target of Ft 104.6 billion. The November deficit raises the deficit for the first eleven months of the year toFt 1,435 billion, compared to the ministry’s full year target of Ft 1,335 billion. (Econews; Nv 5, Vg 5, MH 11, Nb16)Industrial output up adj. 8.4% yr/yr in October Preliminary industrial output rose by a seasonally- and working day-adjusted 1.8% in October alone, and was up8.4% from October 2003 according to working-day adjusted figures, the Central Statistics Office (KSH) reportedyesterday. November output was up by 5.7% from a year earlier according to unadjusted figures. Hungary’sindustrial production rose 8.5% in the first ten months compared to the same period last year. KSH will publishrevised and detailed figures for October industrial output on December 15. (Econews; NG 3, Vg 5, MH 11)

PoliticsFraud cases at referendum complaints rebuffedMany cases of fraud were recorded by election commissioners of the World Federation of Hungarians (MVSz)during Sunday’s referendum, the organization’s campaign chief said at an MVSz press briefing in Budapest

yesterday. Sándor Herpai said the most blatant case occurred in a Szeged polling station, where the ’yes’ and ’no’votes in the referendum on whether to grant Hungarian citizenship to ethnic kin under preferential terms wereswapped and registered accordingly. The National Election Committee (OVB) yesterday rejected the majority of complaints made in connection with Sunday’s referendum, but determined that the campaign silence had beenviolated in one instance. OVB stated the commercial Hír TV news station, known to be close to the oppositionFidesz party, had violated the compulsory campaign silence from Friday midnight to the closing of polls. (MTI; MH6, Nb 6)

Ethnic Hungarians may hand back entitlement cardsMany ethnic Hungarians in Transylvania, Romania, intend to give back their Hungarian entitlement cards toexpress their disappointment over the result of a Sunday referendum that denied them Hungarian citizenshipunder preferential terms, according to rumours spreading there. Dissatisfaction in Székely land, in south-easternTransylvania, has been heated over the past two days. The local government of Hargita county addressed anopen letter to six Hungarian twin-counties, in which it stated they would re-examine these ties over the next

months with those Hungarian counties where the ’no’ votes were in majority in the referendum. (MTI)DomesticNaturalization process under scrutinyPM Ferenc Gyurcsány has instructed Justice Minister József Petrétei to draw up amendment proposals to the lawregulating the naturalization process for ethnic Hungarians to make it easier for them to acquire citizenship. ThePrime Minister believes that some elements of the process are humiliating, especially the Hungarian languageexam and the test on the Hungarian constitution, for which applicants have to pay Ft 28,000. The Justice Minister might also review regulations specifying a one-year-long stay in Hungary necessary for naturalization. TheMinister has to conclude the amendment proposal by mid-January. (Nv 1) R.G.

Richest people in HungaryManager Magazin, owned by the Spiegel group published its ’The first 100 in 2004’ list including the 100 richestpeople in Hungary. The list is led by Gábor Széles, president of Videoton Rt and Sándor Demján of TriGránit Rtwith Ft 50 billion each. Last year’s favorite, Fotex Rt’s Gábor Várszegi is only the 3rd this year, while TamásLeisztinger takes the 4th place. Sándor Csányi, president CEO of OTP Rt has doubled its fortune in a year to Ft30 billion. PM Ferenc Gyurcsány is the 70th on the list with Ft 3.8 billion. (MH 3) R.G.

Former MTV president to be chargedThe police have recommended to the Budapest Chief Prosecutor’s Office to charge Imre Ragáts, former presidentof the Hungarian Television (MTV), with misappropriation, the Budapest Police announced yesterday. Ragátsordered films for Ft 55 million from a company of one of his relatives in 2003, in violation of the Media Law and of a relevant decision of the board of MTV. Ragáts denied the charges all the way through the investigation. (Nv 4)R.G.

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Serbian Hungarian man flees to Hungary A Serbian Hungarian man apprehended by border guards over the weekend said he wanted to flee to Hungaryafter being harassed in Serbia, the spokesman of the border guards said yesterday. The 44-year-old man wastaken into custody by border guards on Saturday in the vicinity of the Röszke (south-eastern Hungary) border station. He did not have any documents and said he chose to enter Hungary unlawfully because he had sufferedrepeated harassment in Serbia. He did not, however, elaborate what the incidents were, border guard spokesman

Ivan Kovács said. The man subsequently requested refugee status in Hungary. (MTI)StocksBUX Close: at 14,417.01, Change: +18.77 (+0.13%)Stock Closing price Daily change (%) Average price VolumeMOL 12,450 0 12,440 134,351Matáv 826 1.3 820 2,221,420OTP 5,387 -0.1 5,370 565,158Richter 22,900 -0.4 22,935 41,542Egis 11,145 1.5 11,068 83,693 Antenna 3,875 -0.1 3,861 6,231TVK 5,375 2.4 5,315 17,650

Rába 660 3.9 658 25,757Budapest Stock Exchange

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09 December 2004Business

T-Mobile, Telenor win 3G LicensesDeutsche Telekom AG's T-Mobile unit and Telenor ASA's Pannon GSM Rt won permits to provide high-speedmobile-phone licenses in Hungary as they look to stay ahead in the competition for the new EU nation's

customers. T-Mobile and Telenor slightly overpaid for the permits, some of the last in the 25-nation EU, saidanalysts including Didrik Kjeldahl of Fondsfinans in Oslo. The government is negotiating the sale of a third licenseto Vodafone Group Plc. Vodafone, T-Mobile and Pannon already have digital phone services in Hungary basedon the global system for mobile communications, or GSM. (Bloomberg; Vg 1, Ng 1, Nb 16, Nv 5)

OTP gets Nova Banka stake for Euro 236 mlnOTP Bank Rt said yesterday that it has won a bid for a 95.59% stake in Croatia's Nova Banka. OTP bid Euro 236million for the stake. OTP signed the contract of sale for the stake on December 7. OTP filed its binding bid for theprivately held Nova Banka on November 24. The price -- about 2,71 times more than shareholders equity -- iswarranted by the present and potential business value of the bank, and the good prospects of the Croatianfinancial markets, the announcement said. OTP expects to close the deal by the end of January. (Econews; Nv 1,Ng 1, Nb 15, Vg 17)

BÁV begins listing prices for gold Pawnshop and auction house BÁV Rt has started listing daily buy/sell prices for gold bullion in order to liquidateits substantial stock of gold. Rates are listed in forints, but calculated in U.S. dollars. BÁV is selling half-ounce andone-ounce bullion, which it is also offering to store for its clients. (Econews; MH 3, Nv 5, Ng 12, Nb 16)

Biggeorge's renamed Eston International Biggeorge's International Rt, a big real estate company based in Budapest, has been renamed EstonInternational. Eston chairman-CEO Adorjan Salamon announced the name change in Budapest yesterday.Salamon said a week ago that he had raised his stake in Biggeorge's to 49.9%, buying a stake from thecompany's founder Tibor Nagygyörgy. The rest of the company is owned by Wallis Ingatlan. Eston Internationalhad sales of Ft 400 million last year and dealt with commercial property worth a combined Ft 100 billion in 2003,or about a tenth of the market. Salamon called 2004 an outstanding year, although declining to give a revenuetarget. (Econews; Ng 5, Vg 13)

Audi to invest Euro 1 bln over 5 yrs Audi Motor Hungaria Kft intends to invest Euro 1 billion in Hungary in the next 5 years, the company's PRmanager Péter Lore announced. In scope of the developments new motor producing equipments will be set up inGyor and technological modernization will also take place besides investments related to Audi TT's successor make's introduction in 2006. The company also wants to increase its workforce with engineers and skilled labor.(Vg 15) R.G.

Graphisoft buys own sharesSoftware developer Graphisoft NV bought 33,000 of its own shares at Ft 1,318.75 per share, the companyannounced on the Bourse's website yesterday. Graphisoft also added that Johannes Reischböck, managingdirector of Graphisoft's German subsidiary sold his share option at Ft 1.320 per share. (Vg 17) R.G.

New Getronics CEO Róbert Dobay has been named as system integrator Getronics EMEA Remote Services Rt's CEO recently. Dobaypreviously worked for Novacom Kft, IBM's ISC-Hungária Kft and was a managing director of IBM Global ServicesKft for a while. Getronics opened its European service center in Budapest in October. (Vg 15) R.G.

Tender announced for design center The Prime Minister's Office (MeH) yesterday announced a tender to turn the former Volán bus station indowntown Budapest into a new national design center. Applicants have until March 1 next year to submit plans for the project slated for completion by spring, 2006. The best designs will be awarded prizes of up to Ft 3 million.The investment is valued at Ft 500 million. (NG 8) S.F.

Walt Disney opens center in Budapest The European division of Walt Disney Internet Group (WDIG) has opened its New Media Services Center (NMSC)in Budapest, company representatives said yesterday. NMSC, a production and technology center with a staff of 30, will be responsible of developing and maintaining WDIG's full range of products, including web-pages, broad-

band internet and mobile services. Budapest had been selected due to its good business culture and stability, lowwages, highly qualified labor force and communication infrastructure, the company said. (MTI)

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Kafijat sells stake in Antenna Antenna Hungária Rt (AH), the state-run broadcaster, announced yesterday that its minority shareholder KafijatKft sold its 5.01% AH stake. Kafijat is majority-owned by Megdet Rahimkulov, chairman of General Banking andTrust Rt (ÁÉB). The holding was taken over by another Rahimkulov company, the London-based Firthlion Limited,which boosted its AH stake to 11.17 through the deal and has become the only shareholder, apart from themajority owner Hungarian state, that now has a holding in AH of over 10%. (NG 11) S.F.

EconomicsOct. trade deficit est. Euro 390 mlnHungary's foreign trade deficit was Euro 390 million in October from exports up 9.2% yr/yr at Euro 3.97 billion andimports rose 9.5% to Euro 4.36 billion, according to preliminary figures published by the Central Statistics Office(KSH) yesterday. Exports in October rose 1.1% from September and imports increased 1.7%. The trade deficitwas Euro 346.4 million in October 2003. Final figures for the September trade deficit, also published by KSHyesterday, came to Euro 361.7 million, compared to a preliminary Euro 329 million announced on November 8.(Econews; Ng 3, Vg 5, MH 12, Nb 15)

Expansion in auditing market The Hungarian auditing market expanded by 7.83% last year while the share of the 10 biggest companiesincreased from 49% to 49.6% in 2003. The top 4 auditing firms, PricewaterhoseCoopers, KPMG, Ernst&Young

and Deliotte holds 44.9% of the aggregate turnover of all auditing companies in Hungary. MriAudit Hungary Kft, acorporation formed in April by seven smaller auditing firms and a member of the Moores Rowland Internationalassociation is 5th on the list with its Ft 549 million in turnover last year. Independent auditors also gained groundin 2003, their market share increased from 12% to 14%. (Vg 1) R.G.

Growth of monetary base accelerates in Nov The annualized month-on-month growth index of the monetary base, derived from trend data, was 108.6% inNovember, up 1.6 %age points on October, the National Bank of Hungary (MNB) reported yesterday. Themonetary base increased by Ft 32 billion on the month, from Ft 1,886.2 billion in October to Ft 1,918.2 billion inNovember. Of the components of the monetary base, the monthly average stock of cash in circulation rose by Ft18.8 billion to Ft 1,453.8 billion, while the monthly average current account balances of monetary financialinstitutions rose by Ft 2.5 billion to Ft 451.1 billion, and the monthly average stock of their overnight deposits grewby Ft 10.7 billion to Ft 13.2 billion. (Econews; Vg 18)

APEH to get fewer than expected premiumsEmployees of the Hungarian tax office (APEH) will only receive premiums equal to their two weeks' wage insteadof the usual two months', Finance Minister Tibor Draskovics announced at an APEH's meeting yesterday. Although tax revenues met the Finance Ministry's prognosis in September, they did not reach previousexpectations. He also added that the Ministry expects substantially better production from the tax office in thefuture through its increasing responsibility in fighting back the black and the grey economy and, at the same timesimplifying tax administration. (Vg 5) R.G

Gov't grants to aid companies to doubleNearly double of this year's funding will be made available to companies under the government's EconomicCompetitiveness Operative (GVOP) and Smart Hungary Programs, an Economy and Transport Ministry officialsaid, adding that R&D and knowledge intensive initiatives will be given top priority, while red tape will benoticeably shorter. In the past two years, seven large-scale investment projects of five top companies have been

awarded grants through the two programs, which created altogether 5,000 new jobs. Next year will also see theextension of individual government grants to investments worth Euro 10-50 million. (NG 4) S.F.

Hotel occupancy upHotels' occupancy rate in the year to Nov. jumped 6% to 62% yr/yr, the Central Statistics Office said in the latestreport. Higher capacity also brought more revenues to hoteliers as guest night sales grew some 13% in the sameperiod. The average room price per night in Jan-Nov was Ft 13,900, of which hotels netted Ft 8,600, however,per-room revenues for five-star hotels were considerably higher breaking the Ft 20,000 mark, while four-starscharged over Ft 10,000 for a room. (NG 4) S.F.

Gov't to launch agricultural loan programThe government has decided to launch a Ft 40 billion subsidized loan program for small and medium-sizedagricultural ventures, Agricultural Minister Imre Németh said yesterday. The loan program, administered by theHungarian Investment Bank (MFB), is aimed at refurbishing wheat storages facilities and remodeling animalgrowing farms in line with EU standards, the minister said. Nemeth added that the loans would be available at a6.2% interest rate for a maximum period of 15 years, with a moratorium of the first two years. (MTI; Ng 3, Vg 5)

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17.9 mln transactions with Mastercard Mastercard holders in Hungary conducted altogether 17.9 million financial transactions at a total value of Ft 460billion in the Jan-Sept period, up a respective 19.3% and 15.8%, according to figures released by the leading UScredit and debit card company. Meanwhile the number of bank cards issued by Mastercard fell slightly to 40,000in July-Sept compared to 160,000 in the preceding six months. Q3, on the other hand, saw a record value of transactions worth a total Ft 920 million, a figure up 11.2 over the same period last year. (NG 5) S.F.

Value of homes falling because of glut Budapest's housing market has still not recovered from the effect of reductions in home loan subsidies; a fall indemand has created an oversupply and prices are stagnating. Still, builders keep building. Demand is declining or stagnating not just on the housing market, but on the commercial property market as well, according to a Q3report on the capital's real estate market by economic research institute GKI. Prices have remained more or lesslevel in Q3, with just a slight drop in the average price for resale homes. (Econews)

Hungarian banks "still inefficient" Hungary's banks need to become more efficient in order to compensate for narrowing margins and to meetincreasing competition, according to a report on the sector by the National Bank of Hungary. Despite their profitability, Hungary's banks are still far less efficient than their counterparts in other EU states. Banks in Hungaryhad combined pre-tax profit of Ft 168 billion in H1 2004, up 43.15% yr/yr. Profits rose at about the same rate ayear earlier too. Revenue from interest was the main contributor to profits, adding up to a combined Ft 267.28billion in H1 2004, up 27.5% yr/yr. (Econews)

AgriMin comments on forint rateSpeaking at a briefing following a government meeting, the Agricultural Minister Imre Németh criticized thestrength of the forint, "There's a weight bearing down on our food industry that we can't take much longer.Producers are just simply unable to compensate for their increasing export prices by boosting efficiency" he said,adding, "The forint's exchange rate to the euro should be steered back to the center of the trading band."(Bloomberg)

AKK mandates USD 100 mln 2-yr bond issueThe Republic of Hungary has launched a USD 100 million floating-rate 2-year note due on December 15, 2006,the Government Debt Management Agency (AKK) confirmed to Econews yesterday. Issue and re-offer price are100%, the coupon is 3 basis points over three-month Libor which was 2.46% yesterday on USD denominated

issues, the spread is also 3 basis points over the three month Libor. Interest is to be paid quarterly lead-managersMorgan Stanley and Deutsche Bank said yesterday. The current issue precedes a USD 500 million ten-year fixed-rate issue, planned to take place in January 2005, and to be lead-managed by the same two banks. (Econews)

Politics

"State security documents should be published" The Socialist Party (MSZP) is working on a bill that would make it possible to publish state security documents of the Historical Archives without any restrictions, the party's chairman said yesterday, "All state security documentsdating from the past communist system, namely from December 21, 1944 to February 14, 1990, should be madepublic," MSzP Chairman István Hiller told reporters after a session of the party's parliamentary group. The currentlaw only makes it possible to freely research the documents, but limits release of the names of agents andinformers. MP Ervin Demeter of the main opposition Fidesz party welcomed that the Socialists "are finally ready todeal with the problem". (MTI; Nb 1, Nv 1, MH 1)

Ethnic Hungarians plan conferenceEthnic Hungarian organizations from all parts of the world and representatives of the Hungarian PermanentConference will seek a unified position about Hungarian citizenship to be granted to ethnic kin at a meeting inSubotica on January 6-7. An invitation was extended to the organizations, including those from western Europeand overseas, by the Vojvodina Hungarian Alliance (VMSz) council at its session held in Subotica, in the Serbianprovince of Vojvodina, on Tuesday. In a press statement yesterday, VMSZ President József Kasza criticized theWorld Federation of Hungarians (MVSZ), for what he called hasty call for a referendum. Kasza played down theresult of the referendum and said there is no need to despair, nor should radical steps be taken. He saidHungarian identity cards should not be returned and black flags should not be hoisted as a sign of mourning, ashas been the case in Transylvania and Székely land in Romania. (MTI)

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Domestic

Construction of new metro line beginsBudapest Mayor Gábor Demszky announced the kick-off of construction on the city's 4th underground line, a Ft300 billion initiative, yesterday. The new, 7.3 km line, which should be ready by late 2009, is designed to link upeastern and southwestern Budapest. Work has begun on the first station, and bids to dig the first tunnel section,

expected to cost Ft 40 billion, have been invited, the mayor said. Some 70 per cent of the funding will be comingfrom the central budget and Budapest is covering the rest, he said. (MTI; Nv 4)

Stockwatch

BUX index: BUX Close: 14429.99 Change: +12.98; ( +0.09%)Stock Closing price Daily change (%) Average price VolumeMOL 12,470 0.2 12,453 113,920Matáv 835 1.1 840 4,259,869OTP 5,380 -0.1 5,405 471,536Richter 22,800 -0.4 22,709 45,345Egis 11,170 0.2 11,190 8,748 Antenna 3,865 -0.3 3,845 26,793TVK 5,330 -0.8 5,370 38,459Rába 695 5.3 696 218,180Budapest Stock Exchange, Dec 9

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K&H Bank's 9-month net profit up 31%K&H Bank Rt's net profit in the first nine months of the year increased 31% over the same period in2003 to Ft 16.6 billion. The bank's subsidiaries contributed less than Ft 1 billion to the figure.

Shareholders are happy with the bank's performance, and in some areas the bank performed better than planned, CEO John Hollows said yesterday. K&H's nine-month consolidated pre-tax profit rose29% yr/yr to Ft 19.9 billion, according to the bank's Q3 report, prepared according to internationalfinancial reporting standards (IFRS). K&H's total assets rose 12% in the twelve months to September toFt 1,604 billion. (Econews; Ng 5, Vg 19)

Keravill goes into liquidationFotex Rt's electronics retailer Keravill Rt decided in favor of liquidation without legal successor at thecompany's board meeting yesterday. The company accumulated considerable losses in recent yearsdue to increased competition and the closure of smaller outlets did not help. According to thecompany's announcement numerous new entries on the market by chains like Media Markt, ElektroWorld and Saturn in recent years generated a price war which turned electronic retail loss-making.

Liquidation proceedings are to start on Dec. 10. (NG 11) R.G.Euro 13.5 mln plant addition completed Robert Bosch Elektronikai Kft, one of German engineering giant Bosch's Hungarian subsidiaries, hascompleted a Euro 13.5 million addition onto its plant in Hatvan, 60km NE of Budapest. The 20,000sqmaddition, which will accommodate production equipment worth Euro 20 million, brings the factory's totalarea to 70,000sqm. The plant currently employs 900 people, but will hire another 1,100 workers by2006. The plant, which was set up in 1998, makes dashboards, cruise control instruments, gearbox andbreak system instruments, air bag systems and fuel injection guidance systems. The plant addition wasbuilt as part of Euro 150m worth of developments Bosch is making in North Hungary. (Econews; Nv 14)

Forlev increases stake in KonzumThe public purchase order of Forlev Kft for holding company Konzum Rt's ordinary shares was closedon Dec. 8, the company announced yesterday. About 2.4 million shares were bought by Forlev Kft for Ft 90 per apiece for an aggregate Ft 216 million. The company increased its stake in Konzum Rt from18.02% to 64.08% though the transaction, which is conditional upon the Competition Office's approval.(NG 11) R.G.

Real estate fund goes public The State Financial Institution Supervision (PSzÁF) has given its consent to exclusive open-ended realestate fund Access to become public from the beginning of January. Besides E. I. S. East InvestmentRt the units of the fund will also be available through financial trading house Buda-Cash Rt. Assets of Access Real Estate Fund are valued at Ft 896 million. (NG 11) R.G.

SW Umwelttechnik to double production

Austrian company SW Umwelttechnik is to double its production capacity in Hungary. The sewagepurification and drainage equipment production company is to construct a new pipe manufacturing hallsouth of Budapest, the company said yesterday. SWU's turnover was Euro 51 million in the first 9months, and it made an operating profit of Euro 800 million. The company's total investment was Euro5.2 million, three quarters of which has already been spent on the construction of the Budapest base.(Vg 13) E.C.

BKV to increase tariffsThe Assembly of the Municipality of Budapest will decide next week on the tariff hikes BKV Rt will effectduring 2005. The current plan calls for a 15% increase in January followed by a 5% increase in July.This in itself will not help the troubled public transportation company as state intervention is needed toavoid bankruptcy said István Atkári vice-mayor. Botond Aba BKV CEO hopes that the central budgetwill relieve the company of its Ft 60 billion debt, otherwise a price hike of more than 30% will becomenecessary to keep the company afloat. (Nv 1) A.K.

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MVM sells excess capacity at auctionThe Hungarian Electricity Works (MVM) Rt sold all of its excess capacity on offer at an auctionyesterday. MVM sold 679.4GWh of electricity to be used during the first six months of 2005. Theauction was MVM's fourth since the partial deregulation of the market has allowed it to sell excesscapacity to Hungary's biggest consumers of electricity. MVM has excess off-peak capacity of 180MW

and excess daytime capacity of 60MW. Off-peak electricity was sold in two phases for Ft 4.54 per kWh,and daytime electricity was also sold in two phases for Ft 8.32 per kWh. Ten Hungarian electricitydistributors participated at the auction, and five purchased electricity. (Econews; Vg 13)

Discount airline carry tourism boomDiscount airlines have brought altogether 338 thousand visitors to Hungary in the first 10 months of 2004. It means that every 8th tourist had been flown by one of the discount companies, which hasresulted in an over Ft 22.5 billion direct income for the Hungarian tourism industry. Attributed to thecheaper flights, the number of guests has gone up by 20% in Budapest by the end of October. Thisyear, state subsidization surpassed Ft 1 billion. (Vg 13) E.C.

Széles re-elected The general meeting of the Confederation of Hungarian Employers and Industrialists (MGYOSZ) re-

elected incumbent president Gábor Széles, with a vote of 96:77. The vote was quite close aschallenger Péter Székely, CEO of Transelektro Group had won the support of Sándor Demján head of "rival" association, National Association of Employers and Entrepreneurs (VOSZ), who would haveliked to merge the two groups. (MH 3, Ng 3) A.K.

New ÁPV head to be appointed According to broadsheet Magyar Hírlap's information, Márton Vági will be appointed CEO of the StatePrivatization and Holding Rt (ÁPV) within a few days by FM Tibor Draskovics. Vági currently holds theposition of deputy director responsible for transactions at ÁPV. Other candidates for the post were PálSzabó, CEO of postal services provider Magyar Posta Rt and István Vásárhelyi, ÁPV deputy director.(MH 3) A.K.

New logistics center for Kecskemét Bertrans Freight, Storage and Commercial Rt is to open a new logistics center at the KecskemétIndustrial Park. The new center, built on a 9.1-acre land, consists of office buildings, customs inspectionhalls, and a reception desk and aims at providing service for Hungary based multinational subsidiariesas well as small and mid size firms of the region. The Ft 553 million investment has been partlysponsored by EU funds. (Vg 13) E.C.

Balaton Airport license awarded Irish-Hungarian consortium Cape Clear Aviation was awarded the license for the operation of Balaton Airport in Sármellék, Western Hungary. Cape Clear will invest heavily in developing Balaton Airport toreach the standard required for the handling of scheduled passenger flights by the EU. Balaton Airportexpects to be fully operational by next summer, in time for high season at Lake Balaton. (Nv 14) A.K.Economics

PM takes stance against strong forint The Prime Minister has said the strong forint is bad for Hungarian businesses and suggested slow andsteady reductions in the base rate could correct the situation. A key issue of competitiveness is theexchange rate policy, and the current firm forint boosts imports while hurting Hungarian business,Prime Minister Ferenc Gyurcsány told a meeting of the National Association of Employers andIndustrialists (MGyOSz) yesterday. Gyurcsány said that "with continuous, slow base rate cuts, a morefavorable situation and a weaker forint can be achieved." (Econews; MH 1)

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EU tender process moving slowly In the frameworks of the National Development Plan, only Ft 2 billion of the Ft 120 billion has beenhanded over to successful applicants. 15 606 applications have been submitted, 3 403 of which havebeen successful, and only 645 winners have signed the subsidization contract so far. To the applicants'surprise, the transfer of monies is slower than expected. Experts, however, are being optimistic: 35-

40% of the total budget of Ft 750 billion reserved for the period of 2004-2006 may be engaged by theend of this year. In 2005, the application procedure is promised to be simpler and more user-friendly.(Vg 1) E.C.

APEH introduces new serviceThe Tax Office (APEH) announced the introduction of a new service to taxpayers. Taxpayers, who onlyhave one source of income, may opt to have their tax returns prepared by the Tax Office automaticallyusing data available from their employers. Those wishing to take advantage of the new service, dubbed ADAM for the Hungarian acronym for tax office tax determination, have until Jan. 15 to submit their requests to APEH. (Nv1) A.K.

Auth warns of banks' risk on forex The deputy-governor of Hungary's central bank has said the high rate of foreign currency-denominated

loans being granted by Hungarian banks poses serious risk. About 60-62% of corporate loans and 10%of retail loans are denominated in foreign currency. A significant amount of businesses' loans aredenominated in Swiss francs while that currency has only a slight share in companies' revenues.National Bank of Hungary deputy-governor Henrik Auth told the Central European Business Center conference yesterday that banks have to monitor these loans more carefully than before. A weakeningforint and rising interest rates could increase installments by 15-20%. (Econews; Ng 5)

Alliance of CE bourses planned A regional alliance of Central-Eastern-European bourses will come into existence by 2010 as the latest, Attila Szalay-Berzeviczy, president of the Budapest bourse announced at a conference in New York cityyesterday. The first step in forming the alliance would be closer cooperation between the Budapest andthe Vienna bourses, which after some delay caused by the EU's investigation into the HVB Bank-led

consortium's acquiring a majority stake in the Budapest Bourse this May might start next year. Besidesthe Warsaw stock exchange, the alliance would also count on the Czech, the Slovak and the Slovenebourses. (NG 11) R.G.

Public procurement at record high A record high in public procurement is expected to be reported for 2004, said László Tunyogi, CEO of Hungarian Public Procurement News Bulletin Kft. After last year's figure of Ft 558.4 billion, the amountis to be over Ft 1000 billion this year, 40% of which is spent on highway construction. The all time highuntil now was in 2002 with Ft 804.6 billion, this year the amount spent is to be 30% higher. The largeamount of public procurement represents the economy as dynamic, because infrastructuredevelopment attracts investors to underdeveloped areas thus providing jobs for tens of thousands of people for years. (Vg 4) E.C.

Agri producer prices down 9.9% in Oct. Agricultural producer prices fell 9.9% yr/yr in October, the Central Statistics Office (KSH) reportedyesterday. Due to extremely good yields, agricultural prices have been declining since July, as aconsequence of which the average price index for Jan-Oct also showed a 0.5% decline. Crop andhorticultural prices declined by 4.4%, while live animal and animal product prices were down 4% ascompared to the first ten months of 2003. (MTI; Ng 3)

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Q3 growth driven by agriculture Added value in the farming sector and more investments spurred Hungary's economic growth in thethird quarter. Hungary's GDP rose 3.7% yr/yr in Q3, with farming sector production up 38.1% and fixedcapital formation up 12.7%. The Central Statistics Office (KSH) published a breakdown of GDP figuresfor Q3 yesterday. The figures show Hungary's GDP growth rate was 4.1% yr/yr in the first nine months

of the year. The value of Hungary's industrial sector increased 3.2% yr/yr in Q3 and the value of itsservice sector rose 2.4%. The production sector grew 7.1% yr/yr in Q3, and rose 8.2% yr/yr in the firstnine months of the year. (Econews; Ng 3)Politics

Monetary policy fight weakens forint The forint was trading at 247.50 to the euro on the interbank forex market yesterday afternoon, asagainst 245.60/70 on Wednesday, weakening 65bp in its band to 12.35% on the strong side of its +/-15% trading band. The forint weakened during the morning session, then hovered around that level butdid not surpass 247.50 in slow afternoon trading. Traders said the forint weakened because of thestronger U.S. dollar and because of the continuing dispute between government and central bank over a desirable exchange rate. (Econews; MH 1, Ng 3, Vg 5, Nb 15)

Draskovics Says He Won't Be Fired Hungarian Finance Minister Tibor Draskovics said he won't be dismissed, countering speculation abouthis exit that led to a decline in the country's currency. "There were so many personnel changes in theministry this year that I'm not planning any more," Draskovics said yesterday. "Nobody else has suchplans either, for that matter." Daily newspaper Magyar Nemzet on Dec. 7 reported Draskovics will befired next year as he may fail to meet the government's budget deficit target. The gap more thandoubled in November from the previous month. (Bloomberg; Vg 5)Domestic

400 yrs of French painting on show in Bp A large-scale exhibition covering 400 years of French painting opens at the Budapest Art Gallery onDecember 17, the organizer said yesterday. The 120 paintings on show will include masterpieces by

Delacroix, Cezanne, Degas, Gauguin, Van Gogh, Matisse, Monet, Picasso, Renoir and Toulouse-Lautrec, on loan from the Louvre, the Musee d'Orsay, the Paris Picasso Museum and other eminentFrench museums. The exhibition will run until February 27. The Hungarian government has assumed anearly Ft 75 billion guarantee for the exhibition, the largest guarantee it has ever undertaken for an artshow. (MTI; Vg 6, Nv 8)Stockwatch

BUX index: BUX Close: 14345.36 Change: -84.63; (-0.59%)Stock Closing price Daily change (%) Average price VolumeMOL 12,335 -1.1 12,411 338,495Matáv 837 0.2 840 1,846,916OTP 5,370 -0.2 5,386 575,373

Richter 22,400 -1.8 22,583 76,881Egis 11,200 0.3 11,198 6,351 Antenna 3,880 0.4 3,861 208,146TVK 5,295 -0.7 5,282 6,458Rába 680 -2.2 686 48,934Budapest Stock Exchange, Dec 10

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BAT lowers Pall Mall price

British American Tobacco Hungary Kft, Hungary's largest local tobacco company, recently decreased the price of its Pall Mall cigarettes by 12% from Ft 500 to Ft 440 per pack, setting off a possible price war of tobacco firms.Unnamed sources reported that rival Philip Morris Hungary Kft is mulling a similar move, and other market playersare also considering the price decrease of their Ft 500 price-range products. According to the communicationsdirector of BAT Hungary, Rita Bede, the price decrease is not a one-off marketing move, but the result of therepositioning of the Pall Mall brand. The central budget may suffer from the price war, as it can expect Ft 1.5billion-Ft 4 billion less income from excise tax in the future. (NG 1) P.O.

Brau board hands in resignation

Members of Brau Union Hungária Rt's board of directors, namely Irma Kelemen, Attila László, and Árpád Németh,have handed in their resignation as of Dec. 31 of this year, the company announced in a press release. Thecompany's BoD now has only one member, Alle Yppma, who represents the Dutch beverages group Heineken,which purchased a majority stake in the rival brewery this October. The resigning members gave no reason for their move. The president of Brau Union's board of directors, Edmund Ranftl, resigned from his post from Sept.15. (NG 7) P.O.

Ice rink goes to Publika

The Prime Minister's Office commissioned Publika Cultural and Event Organizer Kft to build the third annual icerink in front of Parliament this year, according to the Public Procurement Gazette. Two companies submitted a bidfor the tender, but the bid of Austrian Peter Jöbst Sport Managemant KEG was declared invalid. Publika will buildthe 1,500-sqm ice rink for gross Ft 58 million. The rink will be open from Dec. 20. to Jan. 3, and admission will befree. Gambling monopoly Szerencsejáték Rt provides financial assistance for the project, just as on the previoustwo occasions. (NG 3) P.O.

MTV welcomes Fischer for sales

The sales activity of state television MTV Rt may significantly increase as the sales department is to be taken over by András Fischer, former CEO of Radio Danubius, according to daily Világgazdaság information. The newleadership promises to exceed this year's income by Ft 1 billion in 2005. In 2003, the income from advertisementstotaled Ft 2.4 billion, while the plan for 2004 is Ft 3.7 billion. MTV's situation is not going to be easy at all as RTLKlub and Tv2 had 40% of the advertisement market, estimated Ft 135 billion last year. (Vg 5) E.C.

Tatabánya opens gas-fuelled station

Hungarian Electricity Works (MVM) Rt opened a Ft 6-billion gas-fuelled power station in Tatabánya (north-western

Hungary) on Friday, at the site of the city's old power station. The station has three turbines which have acombined capacity of 18 MW. The power station will generate 16.5MW of heat, providing district heating for 22,000 households in the city. The old coal-fuelled plant had increasing difficulty meeting environmentalregulations, so the decision was made to switch to natural gas and oil. The new gas turbines conform to the latestenvironmental regulations. Fuel for the plant will be supplied by Hungarian oil and gas company MOL Rt's facilityin Szentgyörgypuszta, through a 13-km gas pipe laid by pipeline construction company Koolajvezetéképíto Rt.(Econews; NG 5, Vg 5)

EBRD sells stake in Matáv, says Portfolio

The European Bank for Reconstruction and Development has sold its 1.3% stake in Hungarian phone companyMatáv Rt, majority-owned by Deutsche Telekom AG, the news Web site Portfolio.hu said, citing unidentifiedpeople. The 13.5 million Matáv shares were sold for Ft 11 billion ($58.6 million), or Ft 815 a share, according to

Portfolio. Deutsche Telekom has a 59.2% stake in Matáv, while JPMorgan Chase & Co. has an 11.7 % stake,according to Bloomberg data. (Bloomberg; NG 7, Vg 9)

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Aviation Solution to bid for Malév again

The consortium Aviation Solution International said on Friday it will once more submit a bid for the purchase of Hungarian national airlines Malév Rt if a tender is called. The consortium, reported to have been set up by former Malév CEO Ferenc Kovács, was the only bidder in the recent tender, which was declared unsuccessful by theState Privatisation and Holding (ÁPV) Rt on November 18, 2004. The announcement came after ÁPV chairman

Tamás Mészáros said earlier on Friday that a new tender will be invited for state-owned airline Malév in the near future. (Econews; Vg 5)

MOL transfers 8.02% stake in TVK

Oil and gas company MOL Rt has transferred an 8.02% stake in chemicals company TVK Rt from its subsidiaryHermesz Kft to another subsidiary, Slovnaft. Hermesz now no longer holds any TVK shares. MOL announced theannounced the sale on the website of the Budapest Stock Exchange. MOL is Hermesz's only owner. MOL owns98.4% of Slovnaft, which is based in Slovakia. MOL owns 52.69% of TVK through direct and indirect stakes.Hermesz and Slovnaft signed the contract of sale on December 8 and will take effect on December 15, after Slovnaft pays for the shares. (Econews; NG 7, Vg 9)

Greenhouse gas quota for 2005-2007 set

The government has set the quota for greenhouse gas emissions at 93.7 million tons for the period 2005-2007.The figure is contained in Hungary's National Allocation Plan, which outlines for the EU how Hungary willdistribute the quota among businesses. The government will distribute the carbon credits to businesses free of charge in February of next year, with the exception of 2.5% of the credits, which the state will auction off. The saleof these credits should generate Ft 1.7-3.4 billion. Half of the revenue from the sale will go toward renewableenergy projects, and the rest will be spent on environmental projects. (Econews; NG 1, Nb 8)

Wayfinder Systems offers mobile navigation

Wayfinder Systems, a Swedish provider of mobile navigation systems, has started offering its services inHungary. The services allow customers with global positioning system (GPS) enabled mobile devices to pinpointtheir exact location and navigate to their destination using a digital map. The system will be available for all of Hungary from the start of next year. Wayfinder Systems expects to sell a few thousand of its systems in Hungarynext year. Wayfinder Systems has 30,000 users in West Europe and has recently entered the U.S. market.(Econews; Vg 5)

Autoker increases its Depo stake

Israeli-owned property developer Autóker Holding Rt has increased its stake in logistics firm Depo Kft, followingthe purchase of Skála Real Estate Management Kft's 9.09% share for an undisclosed sum. Autóker now has a32.5% share in the Törökbálint-based Depo. The property developer firm has a 40,000-sqm warehouse on thepremises of Depo. The logistics firm made a profit of Ft 213 million on revenues of Ft 411 million last year. (NG 5)P.O.

Homeless CEOs

The budget is loosing billions due to the activity of white-collar criminals who use homeless people's IDs to foundcompanies and commit fraud. The agents offer Ft 5-10 thousand to the homeless in return for their IDs, which areabused and often forged. According to National Police Headquarters official László Vankó, one of the homelessshelters in Budapest houses the headquarters of 72 firms. This suspicious technique is mainly used to charmaway companies that have committed fraud and accrued arrears. These firms, with dues often in excess of Ft 100million, are then sold to the homeless, who have no idea about the contracts they sign. As the leverage is oftenmultiple, investigators find these cases difficult to track down. (Vg 4) E.C.

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Raiffeisen Property Fund's assets increase in Nov

Assets of the Raiffeisen Property Fund Rt increased Ft 1 billion in November to Ft 23.6 billion, RaiffeisenInvestment Fund Management announced on Friday. The share of real estate within the fund rose to 71% after Raiffeisen purchased a big retail facility in Szolnok (central Hungary). Raiffeisen is leasing the store to OBI Rt, a

DIY chain, for 15 years. The value of property in the portfolio increased to Ft 15.9 billion. The fund's yield in themonth of November was 1.23%, and the annualized yield since the fund started was 13.15%. (Econews)

BSE week: BUX drops 1.07% to 14,161.57

The BUX dropped 1.07% to 14,161.57 on the week. It rose to an all-time high of 14,429.99 on Wednesday, but asshare prices dropped on Thursday and Friday, the BUX followed suit. Overall share turnover was Ft 45.9 billion,down from Ft 64.97 billion a week before. OTP Rt accounted for 26.21% of the turnover, MOL Rt for 22.28%,Matáv Rt for 20.75% and Richter Gedeon Rt accounted for 17.49%. Market observers said the Euro 236 millionpurchase price - equivalent to 270% of net assets - OTP paid for Nova Banka was excessive. (Econews)

Economics

Business confidence index pessimistic

Continuing a trend that started several months ago, the monthly business confidence index of market researchcompany GKI Rt declined from October's -11.7 to -16.4 in November, while negative consumer expectationslinger on as manifested by an average score of -26.1, the company said. Industrial companies reported growinguncertainty, with both domestic and export orders diminishing and unsold stocks of manufacturers' own productsgradually accumulating. A negative outlook prevailed among retailers and wholesalers as well as constructioncompanies. This highly pessimistic overall business attitude, which came as a surprise even to the researchers,may be due to the fact that SME's were over-represented in last month's sample at the expense of some of thefastest developing corporate sectors, according to GKI. (MH 5, Nv 2) P.P.

Gov't plans to raise Ft 300 bln from asset sales

Hungary's government said it plans to raise about Ft 300 billion ($1.6 billion) by selling state assets includingstakes in MOL Rt, FHB Rt and Antenna Hungária Rt next year. The government is expecting less revenue thanthis year's Ft 400 billion, as there are fewer state assets available, said Tamás Mészáros, chairman of thegovernment's asset sales agency, at a press conference in Budapest. Hungary is selling state-owned companiesto help pay for financing the budget deficit as the nation spends money to bring its road network and healthsystem up to EU standards. "We can't keep dumping taxpayer money into unprofitable companies," FinanceMinister Tibor Draskovics said at the press conference. (Bloomberg)

Politics

EU concern over tension in Hungary

The confidence ratio in the EU of the Hungarian citizens has gone up from 45% this spring to 49%, according tothe latest Eurobarometer report published last Friday. The confidence of EU investors planning to invest inHungary, however, has decreased significantly as a result of the political split present in the country, said FransPaul Robert van Nouhuys, Ambassador of the Netherlands in Hungary. He emphasized the importance of politicalstability and the urgency of national consensus, and expressed his confidence that EU membership will contributeto the realization of the national goals, which are equally important to both the government and the opposition. (Vg3) E.C.

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World Federation demands recount of votes

Some 400 people demonstrated in front of Parliament yesterday demanding a recount of votes in the electoraldistricts where a suspicion of fraud arose after the referendum on granting citizenship to ethnic Hungarians. TheDecember 5 referendum, initiated by the World Federation of Hungarians (MVSz), proved inconclusive because of

low voter participation. Addressing the rally, MVSz President Miklós Patrubány demanded that votes should berecounted in all electoral districts "where the 'yes' and 'no' votes are suspected to have been interchanged". In hisview, the National Election Committee (OVB) should not have released the official final result of the referendumbefore resolving the complaints presented to it. He said that the OVB failed to deal with over 1,000 complaints.(MTI; MH 2, Nv 4, Nb 7)

Gyurcsány in Iraq

Prime Minister Ferenc Gyurcsány paid a brief visit to the Hungarian military base in Hillah, Iraq, last weekend,accompanied by Defense Minister Ferenc Juhász and Chief of Staff Zoltán Szenes. On the way to his destination,which he reached after a three-hour delay owing to a desert storm, the premier met with the Americancommander of the NATO peacekeeping forces in Baghdad and announced Hungarian plans to contribute 77 T-72

tanks to Iraq's efforts towards a democratic state and armed forces. With its mandate expiring at the end of theyear and not extended by Parliament, the Hungarian contingent currently serving in Hillah will return home beforethe festive season, Gyurcsány said. (Nv 2, MH 6) P.P.

Greens and farmers want stricter GM maize rule

Greenpeace and four associations of Hungarian farmers have called for Hungary to ban strains of genetically-modified (GM) maize until stricter legislation can be drawn up to prevent GM crops from mixing with conventionalcrops. The groups made their demand in a letter sent to several of Hungary's government ministries on Friday.Péter Boszik, who heads the Biokultúra Association, one of the groups which sent the letter, said legislation has tobe made which specifies a minimum safe planting distance between GM maize and conventional maize to preventcontamination. (Econews)

Domestic

No Chernobyl threat to village, MÁV says

Hungarian railways MÁV Rt denied rumors that high levels of radioactivity had been measured in the village of Hegyeshalom on the Hungarian-Austrian border, linked with the 1986 nuclear disaster in Chernobyl, said astatement issued on Friday. MÁV referred to tests done by the national health authorities, which verified thatradioactivity in the soil at a railway depot, where Austria-bound railway wagons coming from the then SovietUnion, were cleaned right after the nuclear spill, did not now exceed permitted maximum values. (MTI)

Elmu builds transformer in Budapest's district 14

Budapest electricity distributor Elmu has installed a new Ft 2.5 billion underground transformer station in the city'sDistrict 14. The station serves 30,000 homes and consists of three 31.5 MW transformers. The substation usesthe more environmentally friendly gas sulfur hexaflouride as an insulator. In addition, the station makes less noiseand emits less electrical radiation. Elmu has spent Ft 16 billion on developments this year, and expects to spend asimilar amount in 2005. (Econews)

Tab tourist development goes ahead

The municipality of Tab, a small town close to the southern shore of Lake Balaton, gave the green light to a realestate development project whose preliminary costs were set at around Ft 1 billion. The construction of a resortvillage, including a thermal spa, a camping site, and an eco-village, is scheduled to begin next year. The localgovernment would finance the project from its own resources, from state subsidies, and from entrepreneurial

investments. (NG 17) P.O.

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NGOs activists petition to curb domestic violence

Three NGOs presented over 6,000 signed postcards to parliament on Friday, demanding urgent legislation andfirm government action to curb domestic violence. The collection of signatures was initiated by AmnestyInternational and two NGOs two weeks ago. Violence against women and children in the family "is a problem

which simply does not get enough attention in Hungary," AI Hungary Director Mark Fodor said. Although theJustice Ministry drafted a bill to keep violent offenders out of the home under an anti-stalking provision, women'sorganizations have challenged it because of the low reporting rate. (MTI)

Stockwatch

BUX index: BUX Close: 14,161.57 Change: -183.79 (-1.28%)

Stock Closing price Daily change (%) Average price VolumeMOL 12,245 -0.7 12,273 160,010Matáv 822 -1.8 835 1,193,451OTP 5,330 -0.7 5,359 138,416

Richter 21,860 -2.4 22,076 144,047Egis 10,750 -4 11,076 12,707 Antenna 3,850 -0.8 3,875 4,451



7days, 2004. december 13

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