7Days, 2005. április 11. (PDF-ből)

7/28/2019 7Days, 2005. április 11. (PDF-ből)

http://slidepdf.com/reader/full/7days-2005-aprilis-11-pdf-bol 1/25

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

05 April 2005Business Tax Committee submits reforms

Passnave on sale againDanubius Hotels plans to double profitsWienerberger restructures productionPSzÁF insists on provisions requirement

Construma opening todayGov’t announces housing tendersGap in interest rates expandsMalév bid deadline April 6K and H signs Ft 25 bln of home loans in past 6 monthsPartium ’70 completes Ft 460 mln investmentDefense companies for sale ÁSZ to examine textbook publisher PSzÁF says 32,000 names on insurance registry

Economics Ft 1.6 trln foreign capital in 2004New road company mooted

Gov’t announces housing tendersHungarian companies could lose Slovak workersEC forecast in line with FinMin projections

Politics President Madl expresses sympathy at nunciatureDomestic Doctor claims full pay for on-call duty

Malév boosts capacity on Rome flightNuclear power plant’s block two up and running

Stockwatch BUX Close: 17,327.29 Change: -77.76 (0.45%)Correction Canon Hungária KftExchange Fixed Middle RateWeather Tomorrow: cloudy

2




06 April 2005Business Richter to sell 4 new products in 2005

IEB to pay 13.3% dividendForint vs forex loansNextiraOne expects 15% revenue riseRussian companies eye MOL shares

Stock exchanges form alliance Argosz to take on K and H namePálinka wins Vienna prizesTrevipark builds lots undergroundComGenex, Microsoft move into Graphisoft parkHighest Court rules on Amstel’s Brau purchaseReal estate developments need infrastructureBAT, Customs Office curb cigarette smugglingStrabag progresses with Siófok spaZalahús liquidatedPiatnik sees 10% revenue rise on the cards

Economics DFI in Hungary Ft 44 blnCrack-down on illegal employmentBudget deficit swells in Q1Ministries disagree on road tax

Politics TV news director sacked for news delayGov’t to double assistance for micro-regions

Domestic Air pollution no longer so bad, says weather serviceU.S. hospital could be built in Hungary

Stockwatch BUX Close: 17,516.63 Change: +189.34 (+1.09%)Exchange Fixed Middle RateWeather Tomorrow: sunny

3




07 April 2005Business ÁPV says 14 parties interested in Malév

ING Insurance profit of Ft 5.3 blnDeal may bring Alstom Power Ft 2 blnKartonpack profitable, but pays no dividendDunaferr board proposes new CEO

Volksbank to open 50 more branchesNova Banka public bid successfulTV2 reports increasing ad revenue in Jan-FebMarks and Spencer sales up 16.8%Strabag to build cement factory in south HungaryMakhteshim acquire 70% stake in BiomarkKVI to sell up to 20 castlesPolice investigate company's losses

Economics Járai: Time for economic reform is now 30% of state assets disappeared ÁAK to issue Ft 690 bln in bonds

9% less cars sold in Q1Gov't lowers annual inflation forecastCity to spend Ft 22 bln on parkingMarch public sector deficit Ft 91 blnRetirement system accused of discrimination

Politics PM's business interests to be investigated Easing of visa restrictions for ethnic kin

Domestic Annus, Fazekas banned for 2 yearsStockwatch BUX Close: 17639.78 Change: +123.15 (+0.70%)Exchange Fixed Middle RateWeather Tomorrow: cloudy

4




08 April 2005Business AH sale set for Mon, Ft 460 dividend proposed

Gasoline prices at historic highKika to spend Ft 10 bln on expansionMacropolis set for MiskolcE. On increase stake in two companies

IBM recruitingNo bids for Tisza Cip?Borsodi brewery’s revenue falls 5%Elektrolux begins operations in new plant Allianz starts health insurance fundRichter may face legal actionSzobi Szörp acquired by managementJysk opens first store in HungaryRegional ’paper to build Ft 1.5 bln HQ

Economics Industrial output up by 1.3 % yr/yr Visa card holders purchases up 11.6%

Euro 110 mln invested in 40 transactionsKNPA criticizedEnergy budgeting by means of cardInternational reserves up Euro 64 mlnConsumer confidence up 1% in Q1

Politics PM, Pres, party heads attend papal funeralDomestic Ft 2 bln archeological park

Former parliamentary consultant convictedWatchdog says TV broke law when pope died

Stockwatch BUX Close: 17558.15 Change: -81.63, (-0.46%)Exchange Fixed Middle Rate

Weather Tomorrow: rain

5




11 April 2005Business GVH approves Ringier control of daily

Antenna AGM approves whopping dividendOTP tops "quality company" listKartonpack to offload NovoprintStock Exchange up 0.3% last week

Porsche optimisticMalév to utilize SármellekCIB Fund starts off with Ft 2.638 blnOTP Rom. Subsidiary to open 22 branchesHochtief buys control of Mélyépít?Malév Boeings to fly to China instead of AmericaLogistics center in Soroksár underwayKingspan opens Ft 2.5 bln factoryVERT calls off sale of Bánhida

Economics 2-month trade deficit up Euro 110 mln OEP's Jan-Mar deficit Ft 104.4 Bln

Hungarians still largely owner/occupier Hotel occupancy rate up at 55.2%Wage increase would mean real estate boomStock of outstanding bonds up Ft 900 mln

Politics MSzP delegation gets free mandate Parties settle dispute over agentsCourt rules against Pokorni

Domestic Hungary to have 9 mln population by 2050 Subway to reach Bosnyák tér in 2010

Stockwatch BUX Close: 17458.16 Change: -99.99, ( -0.57%)Exchange Fixed Middle Rate

Weather Tomorrow: rain

6




05 April 2005BusinessTax Committee submits reformsThe Tax Reform Committee submitted its recommendations for changes to the local business tax and the tax onpersonal income to the Finance Ministry yesterday. The 80 pages of recommendations include proposals tophase out the local business tax over three years and to raise the upper limit of Hungary’s lower personal incometax bracket, László Akar, who heads the committee, said after submitting the recommendations. The

recommendations will affect Ft 1,000 billion in tax revenue, or 4% of GDP, between 2006 and 2008. Thecommittee has recommended reducing the local business tax, currently capped at 2% of total revenue, by onepercentage point in 2006, then by half a percentage point in each of the following two years. (Econews; NG 1, 3,Nv 5)

Passnave on sale again According to daily Napi Gazdaság’s information a tenders will again be invited for the privatization of MahartPassnave Passanger Shipping Rt after the unsuccessful international tender aimed to sell the 51% Mahart share.The only bidder was consortium Masped-Európa, which already had a 33% share. Managing director ZoltánKovács says their first sightseeing ships this season started a week ago. Other novel features include scheduledships between Budapest and Esztergom. Also, they will form part of Budapest’s public transport, with ships plyingbetween Vigadó Square and Margit Island. The company’s revenue last year exceeded Ft 2 billion, Kovács said. Ithas 32 vehicles and a reserve of Ft 300 million for internal renovation He expects a 10% rise both in revenue and

profit. (NG 5) K.H.Danubius Hotels plans to double profits According to materials prepared for the general assembly on April 21, Danubius Hotels (DH) Rt expects pre-taxprofit of Ft 2.6 billion in 2005 as against the Ft 1.4 billion last year. Sales revenue, however, is expected to riseonly 10%. to Ft 42.9 billion. Half of this will likely be given by Gundel restaurant and winery, and this year their total revenue will contribute to the group’s performance. The Hungarian hotels may produce a substantial part of revenue, while subsidiaries plan a 7%, a 18% and a 3% rise in the Slovak Republic, Romania and CzechRepublic, respectively. The Romanian Hotel Sovata, which was renovated last year, may perform well. In anannouncement yesterday the management says a dividends decision may come as late as 20 April. (NG 1, 11)K.H.

Wienerberger restructures productionHungary’s largest construction material company, Wienerberger Brick Industries Rt, is restructuring production to

adjust to drastically reduced demand resulting from the housing subsidy cuts in late 2003, the company said. Aspart of the restructuring program, the company has bought a brick factory in Mohács, southern Hungary, fromBaranya-Tégla Kft. Another Wienerberger brick factory in Táskánd, southwestern Hungary, will be shut down dueto its inconvenient location and uneconomical production system. The company is currently in the process of building a state-of-the-art brick factory in Tiszavasvári, northeastern Hungary, to supply high quality Porothermbuilding blocks to neighboring countries as well as eastern Hungary. (BBJ Online)

PSzÁF insists on provisions requirementFinancial market regulator PSzÁF has rejected General Trust Bank (AÉB) Rt’s request for an exemption from theobligation to set aside general provisions. PSzÁF did not explain its decision in its ruling published yesterday. AÉB declined to comment on the PSzÁF ruling. Under Hungarian law all credit institutions must set aside 10% of their after-tax profit in a given year as general provisions. (Econews)

Construma opening today

The first separate construction industry expo Construma is opening today, covering the whole area of Hungexpo.There will be 21 countries and 932 exhibitors participating. Some 27% of them will display windows and doors.Interior space construction, insulation materials and roofs will also play a major role. Construction materials areless popular with exhibitors. (NG 10) K.H.

Gov’t announces housing tendersThe government has recently announced its tenders for housing development rehabilitation, single-flue chimneyrenovation, and rental fee support. The 2005 budget for such projects is Ft 1.9 billion. One-third of the totalrehabilitation costs are to be subsidized by the government, one-third will be added by the municipalities, and thelast third is to be provided by the owners. The subsidy may be awarded to requests for heat insulation,mechanical equipment, and rehabilitation of public space that directly surrounds the apartments. The governmenthas secured Ft 3.4 billion on rental fee subsidization. (Nv 4) E.C.

7




Gap in interest rates expandsDespite the recent 50-base point interest rate cut of the National Bank, the gap between the interest on bankdeposits and that on bank loans of commercial banks continues to expand. The reason is thought to be the banks’excessive prudence, since if the National Bank’s interest rate drops, commercial banks are quick to lower theinterest rate on deposits, but only slowly decrease the interest rate on bank loans. When the economy slackensand the forint weakens, the method is applied in reverse. According to analysts, bank services will remain costlyin Hungary for a long time, and fees will only decrease slowly. (NG 7, Nv 9) E.C.

Malév bid deadline April 6Prospective bidders for Hungary’s state-owned airline Malév Rt have until 4PM on April 6 to announce their intentto bid for the 99.95% stake being offered by the State Privatization and Holding (ÁPV) Rt. The airline is being soldin a negotiation procedure after the ÁPV board declared the December 28 tender, the second one last year,unsuccessful on March 31. ÁPV announced yesterday that any Hungarian or foreign natural person or legal entity,private investor, or any consortium of these, may bid for the airline. ÁPV said last week that none of the earlier bids made for Malév were in line with the owner’s expectations. An earlier ÁPV statement said that all participantswho made valid bids in the previous tender will be invited to the negotiations. ÁPV will also invite potentialinvestors who announced their intent to buy a stake in Malév after the tender was called late last year. (Econews;Nv 5)

K and H signs Ft 25 bln of home loans in past 6 monthsK and H Bank Rt has extended home loans of nearly Ft 25 billion in the past six months, three-quarters of whichwere denominated in foreign currency, K and H Bank announced yesterday. K and H Bank now has 35,000 homeloans, worth Ft 190 billion. A third of the home loans are forex loans. K and H Bank’s most popular forex homeloan is denominated in Swiss francs. More than 75% of the increase was in the Swiss-franc-denominated loans. Kand H Bank reported lively interest in the new government sponsored ‘nest-building’ program, set up to helpyoung couples buy their first home. K and H Bank said the average size of the loans was Ft 6 million. (Econews)

Partium ’70 completes Ft 460 mln investmentPlastic maker Partium ’70 Rt is nearing completion of a new plant to manufacture bale wrapping materials, deputyCEO Gábor Balogh said. Valued at a total Ft 460 million, the investment is partly funded through a Ft 150 milliongrant from the government’s GVOP business competitiveness program. The facility, scheduled to becomeoperational at the end of April, is expected to boost the company’s 2005 revenues from Ft 2.8 billion last year toFt 3.2 billion. According to preliminary unaudited figures, Partium made net profit of Ft 260 million in 2004 asagainst net losses of Ft 35 million the year before. The company had owner’s equity of Ft 1.5 billion in 2004. (Vg7) S.F.

Defense companies for saleFour defense industry companies are to privatized next year. At the moment the Defense Ministry lacksauthorization for getting the income generated from the sale of its own share. The ministry expects this year budget law to grant this right, administrative secretary of state László Fapál told Napi Gazdaság. He added thatthey already know of investors interested, even with the 50% + 1 remaining in state ownership. The four companies are HM EI Rt, HM Currus Rt, HM Armcom Rt and HM Arzenál Rt. The ministry is probably not takingout dividends from last year’s profit of the four companies, says property department head József Horváth. (NG 1,5) K.H.

ÁSZ to examine textbook publisher The National Audit Office (ÁSZ) is to cross-examine the privatization of the National Textbook Publishing Rt,stated the opposition party Fidesz yesterday. The Fidesz delegate was informed of the examination by ÁSZ CEO Árpád Kovács via mail. According to the opposition party, the results of the examination report would be published

in August. (MH 6) E.C.PSzÁF says 32,000 names on insurance registryMore than 32,000 names have been entered into a new registry of independent insurance brokers created byfinancial market regulator PSzÁF. The register lists 26,000 natural persons and 6,000 businesses, PSzÁF said.Brokers had until March 15 to register, under a law passed last year. József Banyár, the PSzÁF official in chargeof the registration, said the register contained more names than expected. By February 15 a total of 11,000entries had been made, prompting PSzÁF to expect the registry to contain about 20,000 names by the deadline.The registry is required by EU law. (Econews; MH 12)

8




EconomicsFt 1.6 trln foreign capital in 2004Last year a total Ft 1,600 billion of foreign financing capital arrived in Hungary, equaling 8.3% of the GDP, an OTPflash report said. While this is approximately the same as in recent years, financing trends in the corporate, retailand state sectors shifted compared to previous years: as households increased their savings, companies reliedmore on foreign loans in search of fresh investment capital, while state budget conditions improved somewhat. Atthe same time, the report warned, the central budget is likely to close Q1 with a Ft 500 billion deficit, which could

upset the positive trend. (Mon Vg 4) S.F.New road company mootedThe Economy Ministry is looking into ways to set up an independent company to manage Hungary’s entirenational road network, a move that could narrow the Ft 10.6 trillion government debt by as much 2.7%, dailyNépszabadság reported. Expected to manage all aspects of Hungary’s 170,000 km-long road network, the RoadFund Financing (ÚF) Rt would be created out of the Road Management and Coordination Board (Ukig) andheaded up by freshly-appointed Ukig-chief László Horváth. ÚF would be given Ft 133 billion from the centralbudget next year, and would also assume Ft 285 billion in state liabilities arising from road construction programsdating back as far as 1990. (Nb 1) S.F.

Gov’t announces housing tendersThe government has recently announced its tenders for housing development rehabilitation, single-flue chimneyrenovation, and rental fee support. The 2005 budget for such projects is Ft 1.9 billion. One-third of the total

rehabilitation costs are to be subsidized by the government, one-third will be added by the municipalities, and thelast third is to be provided by the owners. The subsidy may be awarded to requests for heat insulation,mechanical equipment, and rehabilitation of public space that directly surrounds the apartments. The governmenthas secured Ft 3.4 billion on rental fee subsidization. (Nv 4) E.C.

Hungarian companies could lose Slovak workersThe number of Slovak workers employed in Hungary is estimated to have increased threefold since the twocountries joined the EU last May but some ongoing large-scale foreign investment projects in Slovakia’s car industry may shift the tide. For the time being the Japanese Suzuki Motor Corporation’s car production plant atthe Hungarian border town of Esztergom employs 2,700 Slovak workers, 40% of its total workforce, and the localunit of Finland’s Nokia also has hundreds of Slovak commuters among its workers. However, Slovakia hasbecome one of the most favorable destinations of foreign investors with its low, 19% flat tax rate on corporate andpersonal incomes. The South Korean Hyundai Motor company’s Kia Motors is establishing a car factory in Zilina,Slovakia, requiring 2,800 workers, and a Peugeot Citroen plant in Trnava will need 3,500 workers. (MTI)

EC forecast in line with FinMin projectionsHungary’s GDP is expected to grow by 3.8-3.9% annually in 2005 and 2006, a report published by the EuropeanCommission (EC) yesterday shows. The majority of macroeconomic indicators included in the EC forecast for Hungary are in line with the Finance Ministry’s projections, the ministry pointed out yesterday. The EC forecastpredicts that employment will increase and that inflation will decline from last year’s 6.8% to 3.8% this year and to3.6% next year. The external balance is expected to improve and the current account deficit to fall from 9% of GDP to around 8%. The EC projects this year’s budget deficit to be 3.9% of GDP and modified next year’sprojected deficit from 4.7% to 4.1% of GDP. The Finance Ministry pointed out that the budget deficit had droppedto 4.5% of GDP last year from 2003’s 6.2% and 2002’s 8.5%. (MTI; NG 2)

PoliticsPresident Madl expresses sympathy at nunciaturePresident Ferenc Mádl has expressed condolences and sympathy over the death of Pope John Paul II at the Apostolic Nunciature of Budapest yesterday morning. On behalf of the Hungarian people, the president expressedhis profound shock over the Pope’s death in the book of condolences opened at the nunciature, the president’soffice said in a statement sent to MTI. ‘This charismatic twentieth-century personality of world historic significancegave us, Hungarians, strength and offered an example with his unshakable faith and all-embracing love. We willtruly keep his apostolic visits to Hungary and teachings about justice and solidarity in our memory,’ the presidentwrote. (MTI)

9




DomesticDoctor claims full pay for on-call dutyThe first sentence on medical overtime announced by the Veszprém County Court of Labor (VMMB) yesterdaymay create a precedent for the future. Of some 16-24 hours of on-call shifts, only 4-6 hours are considered beingon the clock, thus doctors employed as public employees only receive about 4-6 hours-worth of wages. Thesentence, however, clearly states that the entire time of the on-call shift should be considered as normal workinghours, explained Frigyes Kahler to daily Magyar Hírlap. At least 25-30 thousand doctors are in a similar situation

to the plaintiff in this case. According to rough estimates, the budget would be tens of billions of forints slimmer alldoctors’ on-call shifts were paid as regular wages. Doctors winning future lawsuits on the basis of this case mayresult in the government having to pay 4 times as much for an on-call shift. (MH 1) E.C.

Malév boosts capacity on Rome flightMalév Rt announced yesterday it is using larger aircraft on its Rome flight to cope with increased demand for seats on the service before the funeral of Pope John Paul II. The funeral will take place on Friday. Malévcommunications director Kriszta Nemeth said Malév would double seats on the service, operating Boeing-737-800 aircraft on the daily two flights to Rome. Nemeth said that, should the increased capacity be insufficient,Malév would consider increasing the number of daily flights to Rome. Nemeth said there was also demand for aMalév flight from Krakow to Rome via Budapest. (Econews)

Nuclear power plant’s block two up and runningBlock two at Hungary’s only nuclear power plant in Paks, southern Hungary, has been operating at capacity since

yesterday afternoon, the power plant’s spokesman said. A press release from István Mittler said that the blockwas started up on March 28 after a planned overhaul that took it offline in December, and had gradually increasedits performance until hitting full capacity yesterday. At present, the four-block reactor is in full operation andproducing 40% of Hungary’s electric power needs. (MTI; Nb 2, NG 5, Nv 5)

CorrectionCanon Hungária Kft had profit of Ft 100 million on sales revenue of Ft 6.173 billion in 2004.

StocksBUX Close: 17,327.29 Change: -77.76 (0.45%)Stock Closing price Daily change (%) Average price VolumeMOL 16,485 2.5 16,407 600,738Matáv 890 -1.1 891 1,793,085OTP 6,510 -1.7 6,525 1,045,659

Richter 25,210 -1.7 25,303 17,453Egis 16,840 -1.0 16,936 2,765 Antenna 4,500 0.6 4,470 4,018TVK 5,000 1.0 4,990 5,288Rába 725 -2.0 732 8,070Budapest Stock Exchange

Exchange RatesFIXED MIDDLE RATE In forints Apr 04, 2005 National Bank of HungaryEUR 1 247.44USD 1 191.96

GBP 1 359.81CHF 1 159.29JPY 100 177.82CZK 1 8.25PLN 1 60.11

Weather Tomorrow: cloudyHigh 17°C (63°F)Low 4°C (39°F)

10




06 April 2005BusinessRichter to sell 4 new products in 2005Gedeon Richter Rt said it will start selling four new products this year, all of which will be cheaper than competingdrugs. Richter will introduce a version of Merck and Co’s Fosamax osteoporosis drug, the world’s best-sellingtreatment for bone loss, as well as a female hormone patch, a new birth-control pill and a prostate medicine, theBudapest-based company said in a statement distributed at a press conference today. Richter is Hungary’s

market-leading drugmaker and the world’s fifth-largest supplier of birth control and hormone ingredients. Thecompany is expanding into the treatment of osteoporosis, a condition that weakens the bones. (Bloomberg; NG11)

IEB to pay 13.3% dividendYesterday’s AGM of Inter-Europa Bank (IEB) Rt approved payment of a Ft 936 million dividend from its 2004after-tax profits of Ft 2.2 billion. IEB’s net profits last year were almost 50% more than in 2003. The dividendcalculates to Ft 133 per share, or 13.3% of nominal value. Dividend payments will start on May 9. Last year IEBpaid a Ft 88-per-share dividend. IEB’s unconsolidated total assets rose 4.4% to Ft 207.04 billion, and itsconsolidated total assets rose 4.3% to Ft 206.57 billion. IEB had 60,000 retail clients in 2004, giving it a 2% shareof the market, and almost 13,000 corporate clients, or a 2.5% share of the market. (Econews; MH 11, NG 11)

Forint vs forex loansForint loan take-up in home lending is expected to pick up in the second half of the year as domestic interest rates

continue to fall on the heels of a narrowing benchmark rate, while forex rates are likely to climb further on globalmarkets, a poll of seven domestic banks showed. Today forex loans still account for as much as 50% to 80% of banks’ total lending, which is unlikely to change in the short-term due to keen competition, the banks said. Forexloans still account for roughly half of the total loans at OTP Bank Rt (which started extending such loans last July),while this rate is 85% at Raiffeisen Bank Rt. (NG 1)

NextiraOne expects 15% revenue riseNextiraOne Hungary Kft, a provider of integrated enterprise network solutions, aims to increase revenue 15% thisyear over 2004’s Ft 2 billion, managing directro Otto Tóth announced yesterday. Last year the company’s revenuerose 56%. About three-fourths of NextiraOne’s revenue comes from sales of products, and the rest comes fromservices. Tóth noted that demand for internet telephony was growing in Hungary, and NextiraOne expects itsrevenue from this area to grow 7% this year. (Econews)

Russian companies eye MOL shares

According to the Russian press, Russian companies Gazprom and Lukoil may submit a tender for the state-owned share of MOL Rt, which the Hungarian government plans to sell in H2 this year, said a manager of Gazprom in Russian daily Vedomostii. Last week Gazprom president Aleksei Miller told Reuters that he might beinterested in buying the whole or a part of the 11.8% share of MOL. No Hungarian reply has so far arrived. Thelast announcement said that it would be sold to financial investors. In the meantime the MOL share temporarilyexceeded the record of Ft 16,800. (NG 11) K.H.

Stock exchanges form alliance At a forum held in Vienna to celebrate the introduction of Raiffeisen Bank to the stock exchange, representativesof the Vienna and Budapest stock exchanges announced that they intend to further develop their cooperation intoa Central and Eastern European Stock Exchange Alliance that would possibly include neighboring stock markets,such as Bratislava, Prague, Bucharest and Sofia. As a first step, they focus on the Warsaw stock exchange,which is awaiting privatization. The expanded Alliance would eventually become a stock exchange company in

2007, financing its own future growth. Specialists from the two stock exchange organizations will hold a pressconference on the subject in Budapest, on 26 April 2005. (Nb 12) M.M.

Argosz to take on K and H name Argosz Insurance Rt will change its name to K and H General Insurance from the start of June, K and H Bank Rtannounced on Monday. The company, which is almost entirely owned by K and H Bank’s majority owner,Belgium’s KBC, will serve as K and H Bank’s general insurance arm. Together with K and H Life Insurance, thebank controls almost 4% of Hungary’s insurance market. Argosz, founded in 1992, has a licence to sell lifeinsurance and non-life insurance products, but almost all of its revenue from premiums come from non-lifepolicies. Argosz’s revenue from premiums increased 6.86% last year to Ft 14.98 billion. (Econews)

11




Pálinka wins Vienna prizes At the Vienna spirits contest Destillata , seven Hungarian pálinka spirit distillers won 24 prizes, proving the qualityof this traditional national drink. Pálinka, now a protected Hungarian product, has a very low market share both inHungary and abroad. While the average Hungarian consumes spirits equal to about 1 gallon of 100% alcoholeach year, the majority buy cheap drinks mixed from alcohol, water and aromas, and more sophisticatedconsumers go for foreign spirit types. To improve the image of pálinka, the National Federation of Hungarian FruitPálinka Distiller Associations urges the government to impose a more efficient ban on commercial circulation of cheap, low-tax spirits distilled for own use. (Nb 13) M.M.

Trevipark builds lots undergroundTrevipark Ltd., the London-based Italian company offering automatic car parking system solutions, is set to launcha multibillion forint investment in Hungary to build a dozen new underground parking lots nationwide, NapiGazdaság said quoting unnamed sources. The first project is scheduled to start in Zalaegerszeg, westernHungary, this year, where Trevipark is looking to build a fully automatic underground lot in the town center toaccommodate as many as 216 cars. Trevipark has also bought plots for similar investments in several other towns in the west of Hungary, including Kaposvár, Veszprém and Pécs. (NG 1) S.F.

ComGenex, Microsoft move into Graphisoft parkBudapest’s high-tech Graphisoft office park opened a new Ft 1.5 billion building yesterday. The 6,000 sqmbuilding will be occupied by biotech company ComGenex Rt and software company Microsoft Hungary Kft.Microsoft’s product support centre will employ 50 people from summer. Budapest Mayor Gábor Demszky and ITand Communications Minister Kálmán Kovács attended the official opening ceremony. The park now hascombined working space of 24,000 sqm. (Econews; NG 5)

Highest Court rules on Amstel’s Brau purchaseThe Highest Court yesterday upheld a joint appeal by the financial authority PSzÁF and Amstel Rt to review aBudapest Municipality Court decision of last August which ordered PSzÁF to reject Amstel’s price offer for outstanding Brau Rt shares held by small investors. According to the Highest Court ruling, small shareholders hadno authority to file a legal challenge against the original PSzÁF decision that sanctioned Amstel’s public price offer for the remaining Brau stocks it did not already hold. Following the municipality court judgment ruling in favor of small investors, Amstel was ordered twice by PSzÁF to raise its Brau offer, which it eventually did from Ft 12,800to Ft 17,200. (NG 11) S.F.

Real estate developments need infrastructureRecently-completed housing estate projects in Budapest are losing value because of the underdeveloped trafficnetwork, according to unnamed sources. In the past two-three years, Óbuda and the northern part of Pest haveseen explosive growth. The trend continues: in the next three years, up to 5,000 new apartments and a total200,000 sqm of offices will be constructed in those areas. The resulting 7,000-10,000 cars of new local workersand residents require the expansion of the embankment and the Árpád bridge junction, as well as the creation of new parking lots, but the capital’s seven-year plan does not include any related developments. (Vg Tue 23) M.M.

BAT, Customs Office curb cigarette smugglingBritish American Tobacco Hungary Kft and Hungary’s National Customs and Excise Office signed an agreementyesterday to cooperate to stem the flow of illegal cigarettes into the country. The Customs Office seized more than300,000 cartons of cigarettes in the first quarter of 2005, almost twice as many as in the same period a year earlier, and estimates smuggled cigarettes now account for about a fifth of the market. Pauline Stam, the CEO of BAT’s Hungarian unit, said it was the company’s duty to take a stand to protect legal brands. BAT expects totalcigarette sales in Hungary to drop to Ft 13.3 billion this year, down from about Ft 23 billion in previous years.(Econews; Nv 6, MH 11)

Strabag progresses with Siófok spaStrabag Rt has started building the wellness and thermal bath complex at Siófok, on Lake Balaton. The local-government-owned investor Termofok Kft is planning to finance the project partly from the Ft 70 million obtainedthrough the Széchenyi Plan and Ft 40 million allocated by the county council. In addition to Termofok’s 8,000 sqm,Ft 1.15 billion spa center, a Ft 8 billion recreation complex project will soon be launched by Israeli investor LAShiraz Kft. on the neighboring 24,000 sqm plot, including four apartment buildings and a service-oriented mall.(Vg Tue 13) M.M.

Zalahús liquidatedThe Zala County Court yesterday ordered the initiation of the liquidation process against the Zalahús Rt followingseveral requests, said Árpád Beznicza court spokesman. Zalahús did not submit an appeal. Vectigalis Rt fromBudapest has been appointed as liquidator. (Nv 6) K.H.

12




Piatnik sees 10% revenue rise on the cardsThe Hungarian distributor for Austria’s Piatnik, a maker of board games and playing cards, plans to increaserevenue by 10% in 2005 from Ft 1.2 billion in 2004, managing director Gábor Gyöngyösi announced yesterday.Pitanik distributes 2,000 products in Hungary. Cards account for about 15% of sales and Piatnik’s own games for about 25%. Games produced by other companies and sold buy Piatnik make up the rest. Piatnik is among the topfour companies on the market for board games and leads the market for cards, Gyöngyösi said. He added thatPiatnik controls about 60-70% of the Hungarian market for playing cards, selling 800,000 packs a year. (Econews)

EconomicsDFI in Hungary Ft 44 blnThe Hungarian National Bank (MNB) published a survey on the investments of the past decade, showing thatsince 1995, direct foreign investments have risen five-fold in Hungary, reaching an estimated Ft 44 billion. Thedominant investors, in order of importance, are Germany, the Netherlands, Austria, the USA and France. Thesurvey also showed that by the end of 2004, Hungarian investment abroad had grown to 15 times the 1995 value.Due to favorable tax laws, the Netherlands has worked as a channel for incoming US capital. Previously, manyHungarian firms invested in ‘offshore countries’ like Cyprus, but the recent trends show that companies aretargeting the neighboring countries of Slovakia, Macedonia, Bulgaria and Croatia. (Nb 12) M.M.

Crack-down on illegal employmentThe construction and catering sectors can expect tighter checks on outlay for wages as a result of a new FinanceMinistry initiative. The government wants to clamp down on black labor and ensure the legal operation of

economy, said political secretary of state Tamás Katona at the parliamentary session yesterday in his preface totax law amendment package. The tax reform proposal also deals with comparing the expected proportion of wages and balance sheet. According to Magyar Hírlap information the ministry is still working on the details andother sectors are also likely to be subject to stringent monitoring. With individual entrepreneurs the tax authorityalready has the right to suppose a lowest realistic wage. With the same aim of extending legal employment thegovernment also plans to curtail and then abolish the paying of health care contributions in one sum. (NG 3) K.H.

Budget deficit swells in Q1The central budget deficit for Q1 is nearing the half of the sum planned for the whole year. The Finance Ministrycalled an unexpected press conference for 5 o’clock this afternoon to publish the Q1 data. Ministryrepresentatives expect a Ft 79 billion deficit for March, while market analysts predict Ft 10 billion more, making atotal of Ft 482 billion for Q1. In March the motorway company Nemzeti Autópálya (NA) Rt transferred the Ft 125billion for the motorway bills, providing income that makes the planned deficit appear controllable. According tounnamed sources, only in summer will the government have to face the fact that budget needs modification. (MH

3) K.H.Ministries disagree on road taxThe road tax on foreign drivers in Hungary, mooted by the Finance Ministry in January, was opposed by theEconomy Ministry but the Finance Ministry continued to work on the plan, according to unnamed sources. Thetwo ministries are now engaged in a dispute, since the road tax was to have been introduced from April on. (MH3) K.H.

PoliticsTV news director sacked for news delayHungarian Television President Zoltán Rudi has fired György Nika from his job as news director for failing tointerrupt programming to immediately announce the death of Pope John Paul II on Saturday night, a statementsent to MTI yesterday, said. The president made his decision following an investigation to determine who waspersonally responsible for the delay with which public television broke the news of the Pope’s death. (MTI; Nb 4,Nv 5, MH 6)

Gov’t to double assistance for micro-regionsThe government has budgeted Ft 15 billion in 2005, nearly twice as much as last year, to assist in providing publicutilities to micro-regions, Interior Minister Monika Lamperth said at a conference yesterday. The opposition Fideszparty criticized the associations, saying that micro-regional reorganization was nothing more than an effort tocentralize control of local regions as had been done in the communist era. Fidesz MP Éva Mikes said that Ft 15billion was the annual budget of a small town, so, considering the magnitude of the job of providing utilities to thewhole country, it was not a very large amount. (MTI; Nv 5)

13




DomesticAir pollution no longer so bad, says weather serviceThe amount of heavy metals in Hungary’s atmosphere has not exceeded the critical level in the past five years,an official of the National Weather Service told a conference yesterday. All through the 1990’s high lead andcadmium values were registered, but the situation has been improving since 2000, László Bozó said. At the sametime, Bozo said, the air in and around Budapest is still heavily polluted with nitrogen-dioxide, largely due to thecity’s heavy traffic. (MTI; MH 2)

U.S. hospital could be built in HungaryU.S. investors could raise funds for a greenfield U.S. hospital in Hungary that could provide premium healthservices to expatriates as well as Hungarians, Health Minister Jenö Rácz said following talks with U.S. healthofficials in Washington on Monday. After talks with U.S. Secretary of Health and Human Services Mike Leavitt,Rácz said the U.S. administration urged that a five-year framework agreement Hungarian and U.S. health officialssigned on January 14 this year should be filled with concrete projects soon. (MTI)

StocksBUX Close: 17,516.63 Change: +189.34 (+1.09%)Stock Closing price Daily change (%) Average price VolumeMOL 16,800 1.9 16,780 869,461Matáv 882 -0.9 887 2,935772OTP 6,524 0.2 6,479 954,905

Richter 26,300 4.3 25,651 52,011Egis 16,780 -0.4 16,714 38,080 Antenna 4,500 0.0 4,479 3,154TVK 5,000 0.0 4,990 3,643Rába 735 1.4 737 11,420Budapest Stock Exchange

Exchange RatesFIXED MIDDLE RATE In forints Apr 05, 2005 National Bank of HungaryEUR 1 247.40USD 1 193.01

GBP 1 361.72CHF 1 159.20JPY 100 177.51CZK 1 8.23PLN 1 59.94

Weather Tomorrow: sunnyHigh 20°C (68°F)Low 6°C (42°F)

14




07 April 2005Business

ÁPV says 14 parties interested in Malév

The State Privatization and Holding Company (ÁPV) could start negotiations as soon as this week with 14investors who have signaled their interest in purchasing a 99.95% stake of Hungarian airlines Malév Rt, ÁPV saidyesterday. On March 31 ÁPV declared a tender invited last December for the stake unsuccessful and decided to

start negotiations with potential buyers. The December tender was the second unsuccessful attempt to sell thenational airlines through a tender last year. ÁPV said on Monday that any Hungarian or foreign natural person or legal entity, private investor, or any consortium of these, may bid for the airline. (Econews; NG 4, Nv 5, MH 13, Nb14)

ING Insurance profit of Ft 5.3 bln

Insurance company ING Insurance Rt had after-tax profit of Ft 5.3 billion according to preliminary figures in 2004,Ft 1.2 billion more than a year earlier, president and CEO György Bordás said yesterday. ING Insurance will pay45% of last year's profit as a dividend. The ING group in Hungary, which includes ING Insurance and INGvoluntary and private pension funds, managed assets of about Ft 500 billion at the end of 2004, Ft 120 billionmore than a year earlier. ING Insurance had revenue from premiums of Ft 67 billion in 2004. ING controlled27.5% of the life insurance market in 2004, making it market leader for the eighth year in a row. (Econews; NG 4)

Deal may bring Alstom Power Ft 2 blnThe Hungarian unit of France's Alstom, a builder of power plants, stands to earn Ft 2 billion over the next sixyears under a deal signed by its parent company to retrofit the Ringhals nuclear power plant in Sweden, AlstomPower Hungária said yesterday. Alstom Power Hungária will supply eight 120-tonne moisture separator reheatersfor the project, which is worth a total Euro 190 million. Alstom Power Hungária has supplied other nuclear power plants in Europe with parts through its parent company's orders in the past. (Econews; NG 5)

Kartonpack profitable, but pays no dividend

Packaging company Kartonpack Rt ,some of which shares are traded at Budapest Stock Exchange, held itsgeneral assembly yesterday. The company's shareholders approved Kartonpack's 2004 business report with Ft1.2 billion net revenue and a profit of Ft 63 million. The general assembly decided not to pay a dividend.Kartonpack is majority-owned by Britton Group. (Ng 12) M.K.

Dunaferr board proposes new CEOThe board of Hungarian steel maker Dunaferr Rt has proposed the appointment of Sushil Trikha to replace CEOPéter Hónig, who is leaving his post by mutual consent, the board said on Tuesday. Shareholders will vote onTrikha's appointment at an AGM on April 26. A consortium of Ukraines's Donbass and global steel giant Dufercobought Dunaferr last year in a deal worth about Ft 78 billion, most of it debts. Additionally, the consortiumpromised to make almost Ft 100 billion in further investments. Trikha, 62, joined the Duferco group in the mid-nineties, and served as vice president in charge of strategy and investments until early this year. (Econews; MH13)

Volksbank to open 50 more branches

Volksbank plans to open 50 more branches in Hungary by 2008, László Balázs, chairman of the board of Hungarian Volksbank, yesterday. Volksbank will raise capital in its Hungarian unit by Ft 2.4 billion in May to payfor the expansion. Hungarian Volksbank will use Ft 1 billion to raising the bank's registered capital, and another Ft1.4 billion to raise capital reserves. Later Volksbank will inject a similar amount in its Hungarian unit. (Econews;NG 5)

Nova Banka public bid successful

OTP Bank Rt completed the public purchase bid made to the small stockholders of Croatia's Nova Banka d.d., inwhich it has recently acquired a 93.63% stake. The bank purchased an additional 60 844 shares from minorityowners for a total of Euro 6.7 million, at the same share price as it had previously paid to the Croatian state.Hungary's leading commercial bank boosted its stake in the newly acquired subsidiary to 96.3% through thepublic bid. (BBJ Online)

TV2 reports increasing ad revenue in Jan-Feb

Commercial TV channel TV2 reported an ad revenue of Ft 1.18 billion in January this year, which is 24% higher than January last year, commercial director Zoltán Várdy announced. TV2's ad revenue reached Ft 1.69 billion inFebruary 7% up from last year's February, Várdy said. The January rise is due to more commercials bypharmaceutical companies, Várdy said. TV2's owner MTM-SBS Rt had a net revenue of Ft 22.55 billion and apre-tax profit of Ft 2.53 billion last year. (Ng 5) M.K.

15




Marks and Spencer sales up 16.8%

High street retail giant Marks and Spencer had sales of Ft 2.65 billion in Hungary last year, 16.8% more than in2003, "S" Modell Trading, the company which has the exclusive rights to operate Marks and Spencer stores inHungary, said yesterday. This year, turnover is expected to increase 20%, "S" Modell CEO Katalin Jüttner said,without offering further details. Hungary's newest Marks and Spencer shop was opened in April in Budapest'sMammut II shopping mall, The 1,100sqm store accounts for almost a third of Marks and Spencer's 3,500sqm of retail space in Hungary. (Econews; MH 11, Nv 5)

Strabag to build cement factory in south Hungary

Construction company Strabag Rt plans to build a cement factory in one of three villages of Baranya county,south Hungary, communications manager Ottó Zimmermann announced. Following environmental feasibilitystudies, Strabag has narrowed the potential sites to three villages, Királyegyháza, K?vágósz?l?s and Bükkösd,Zimmermann said. None of the potential sites is ideal, as a road to the mine should be constructed in Bükkösd, nomotorway connection is available in K?vágósz?l?s and raw material should be delivered by railways toKirályegyháza. Strabag wants the new cement factory to employ 100 people and operate from 2009,Zimmermann said. (Ng 5) M.K.

Makhteshim acquire 70% stake in Biomark

Makhteshim Agan Industries Ltd, the world's biggest maker of generic agricultural chemicals, said it's buyingcontrol of Biomark Tradinghouse Ltd, a Hungarian distributor of crop protection products. Tel Aviv-based

Makhteshim signed a memorandum of understanding to acquire a 70 % stake in Biomark, which has been itschief distributor in Hungary, the Israeli company said yesterday. It also received an option to buy the rest of Biomark, Makhteshim said. It did not disclose financial details. Makhteshim increased profit by 56 % last year as itmade four acquisitions and said it expected to increase sales in the U.S. and Europe. (Bloomberg)

KVI to sell up to 20 castles

The Treasury Asset Directorate (KVI) plans to sell about 20 castles in Hungary this year. To offer these buildingsfor sale, Parliament must soon amend the law on permanent state property and delete these buildings from thelist. The castles in question are mostly in bad condition, but host either hospitals or other social institutions. Thecastles could be reconstructed by private investors into hotels. However, KVI wants the castles to run a smallmuseum on the history of the building and the village. (Ng 9) M.K.

Police investigate company's losses

Police are investigating last year's operation of the company Town Management and Tourism Rt, Fejér Countypolice spokeswoman Ágnes R. Szabó told Népszabadság. The company is owned by the municipality of Gárdony, a town on the shore of Lake Velencei. The company managed to make a deficit of over Ft 160 millionduring one year, said vice mayor Pál Eötvös. At period the company was headed by György Horváth, who is nowthe president of the local Fidesz group. Former CEO Attila Kovács alleged that when he was dismissed inDecember 2003, the company was profitable and had a cash reserve of Ft 150 million. (Nb 6) K.H.Economics

Járai: Time for economic reform is now

Central bank governor Zsigmond Járai said yesterday that Hungary's 2010 target date to adopt the euro could bepushed back if the government waits until after next year's general elections to start economic reforms. If we wantto introduce the euro in 2010, we must start economic reforms immediately, Járai said. Járai said Hungary's

economy had experienced a period of relative calm recently, helped by external conditions. This would have beena good time to start reforms, but the government had missed its chance, he said. If economic conditions take aturn for the worse, Hungary's economy could easily suffer. (Econews; MH 2, Nv 5, Nb 12)

30% of state assets disappeared

Some 30% of state assets vanished into thin air during 15 years of privatization, the State Audit Office said in areport to parliamentary committees. About a third or half of the loss is due to depreciation and poor management,while less arose as a result of the Balkans war, the pressure to sell in order to keep the budget in balance andfocus on short-term goals, President Árpád Kovács said. Only 10% of the national assets in 1990 are still ownedby the state, which is currently valued at Ft 770 billion, of which up to Ft 600 billion worth can be privatized yet. Inother news, both opposition leader Fidesz and the Socialists have motioned that wine company Tokaj TradingHouse Rt be exempt from privatization, with the major coalition member also pushing for the Hungarian ElectricityWorks Rt (MVM), Magyar Posta Rt and the Paks Power Plant Rt to remain in state ownership in the long run. (MH

2, Nv 3, 5) P.P.

16




ÁAK to issue Ft 690 bln in bonds

The State Motorway Management Rt (ÁAK) is preparing for a Ft 690 billion international bond issue to finance thetakeover of ongoing highway projects from the National Highway Rt (NA), State Secretary of the Economy andTransport Ministry Gábor Dióssy told Parliament's economy committee yesterday. The issue will take place by theend of Q3. The transfer of ownership is designed to move the costs of highway construction outside of the budget,with ÁAK using external financing in spite of being a state-owned company itself. In order to simplify the transfer,NA will remain in charge of the construction projects so contracts will not need to be modified. Simultaneously,

ÁAK is working on the introduction of the electronic highway pass system, which will allow the operator to chargedrivers proportionately to highway use. (NG 3, Nv 5) P.P.

9% less cars sold in Q1

Approximately 41,500 cars were sold in Hungary in the first three months of this year, which is 9% less than in thesame period of last year, according to the survey of daily Napi Gazdaság. Nevertheless, the picture is rather mixed for the top ten makes. Suzuki, Opel, Ford and Skoda could each sell more cars in Q1, 2005 than in Q1,2004, while Renault, Volkswagen, Peugeot, Toyota and Chevrolet performed worse in the same period. Amongother makes, Kia is booming after selling 193 cars all last year and 501 in Q1, 2005. (Ng 4, MH 11) M.K.

Gov't lowers annual inflation forecast

The government lowered its forecast for the average annual inflation this year to between 3.5 % and 4 %,according to a Finance Ministry report. The government, which previously expected about an average inflation

rate this year of about 4 %, according to a Feb. 25 report by the daily Népszabadság, lowered its forecast after the annual rate slid to 3.2 % in February, the lowest since June 1981. "Disinflation was faster than expected,"Finance Ministry State Secretary Tamás Katona said yesterday. "We will probably undershoot the central bank'starget." (Bloomberg; Nb 12)

City to spend Ft 22 bln on parking

Budapest will spend Ft 22 billion in the next two years on car parks to give a boost to the development of a park-and-ride traffic system in the metro area, Vice Mayor Pál Vajda said. The city is planning to build about 50 newunderground and surface parking facilities in addition to the current 31, where commuters will be able to leavetheir cars before changing to public transport to the city center. The locations chosen for these projects includeBaross tér, Rákóczi tér, Bocskai út and M?egyetem rakpart. About 240,000 residents of the commuter belt drivetheir cars to Budapest and back home every day. (MH 6) P.P.

March public sector deficit Ft 91 blnHungary's public sector, excluding local councils, registered a GFS deficit of Ft 91 billion in March and the three-month deficit came to Ft 484.9 billion, Finance Ministry figures published yesterday show. The first-quarter publicsector deficit was equal to 47.4% of the full-year target. The central budget deficit hit 53.3% of the full-year targetof Ft 704.6 billion. The ministry had earlier forecast a deficit of Ft 78.6 billion for March and Ft 472.6 billion for thefirst quarter of the year. The market expected the March fiscal deficit at around Ft 90 billion, including Ft 125billion in one-off revenue from National Motorways (NA) Rt as refinancing for the cost of motorway constructionslast year which had been originally covered by the central budget. (Econews; Nv 5, MH 11)

Retirement system accused of discrimination

A group of factory workers, led by János Kokinda, filed class action with the Constitution Court for a lessdiscriminative retirement system, as the current regulations do not allow them to stop working until they reach 62

years of age. The petitioners are suggesting that everyone who has worked at least 38 years should be grantedold-age pension. Since the majority of Hungarian manual laborers in their 50s or 60s have had a job since age 14,many of them will have worked for 48 years by the time they are allowed to retire, Kokinda pointed out, comparingtheir situation to other, physically no more demanding jobs from which retirement is possible after as few as 25years of work. Moreover, these people have also duly paid their contributions to social security, and yet once laidoff they cannot expect more from the state than meager unemployment benefits, Kokinda added. (Nv 4) P.P.

17




Politics

PM's business interests to be investigated

Parliament's procedural committee yesterday postponed making a decision on whether to set up a parliamentarycommittee to investigate allegations that Prime Minister Ferenc Gyurcsány and his family used illegal means toaccrue billions of forints. Two MPs from center-right Fidesz party said last Friday that Gyurcsány and his mother-in-law Piroska Apró (daughter of a high-ranking communist official during the regime that collapsed in 1989/90)had used ties with state-owned companies to reap illicit gains from privatization deals. The original proposal to setup an investigating committee was signed by 77 deputies. (MTI; Nb 2, Nv 3)

Easing of visa restrictions for ethnic kin

A proposed amendment to the law concerning visas granted to Hungarian minorities may be proposed as early asthis month, government commissioner Dezs? Avarkeszi said. This proposal was approved of at a governmentsession yesterday. According to the law, travel into Hungary would be uunrestricted both in number and duration,for a 5 year period. Avarkeszi's proposal also suggests a 20 month long process for ethnic Hungarians obtainingcitizenship as against the current 42 months. Avarkeszi's appointment as commissioner was prolonged by threemonths while he was given the task of working on the conditions under which ethnic Hungarians can aquire aEuropean passport. (Nb 3) K.H.Domestic

Annus, Fazekas banned for 2 years

Two Hungarian track and field athletes who were stripped of their gold medals at last year's Athens Olympics for doping offenses were today banned from competing for two years. Adrián Annus, a hammer thrower, wassuspected of handing in a urine sample provided by another person and refused to take a drug test on his returnto Hungary. Róbert Fazekas was caught trying to swap his sample after winning the discus competition. The Courtof Arbitration for Sport in Lausanne, Switzerland, on April 1 rejected the pair's appeals to have their gold medalsreturned. The Hungarian Athletics Federation, which in November banned Fazekas for one year and decided notto punish Annus, increased its sanction following a request by the International Association of AthleticsFederations. (Bloomberg; MH 23, Nv 15)Stockwatch

BUX Close: 17639.78 Change: +123.15 (+0.70%)

Stock Closing price Daily change (%) Average price Volume MOL 16,975 1 16,949 451,474 Matáv 880 -0.2 880 1,042,565 OTP 6,619 1.5 6,560 649,947 Richter 26,300 0 26,172 31,564 Egis 17,200 2.5 17,184 30,926 Antenna 4,590 2 4,505 3,562 TVK 5,070 1.4 5,038 1,260 Rába 740 0.7 736 8,648 Exchange

FIXED MIDDLE RATE In forints

Apr 6, 2005 National Bank of Hungary EUR 1 246.87 USD 1 191.52 GBP 1 360.44 CHF 1 159.18 JPY 100 177.10 CZK 1 8.24 PLN 1 60.10 Weather

Tomorrow: cloudy

High 19°C (67°F)Low 9°C (49°F)

18




08 April 2005BusinessAH sale set for Mon, Ft 460 dividend proposedThe State Privatization and Holding Company (ÁPV) yesterday decided to launch the sale of a 75% plus one votestake in the terrestrial broadcaster and telecom Antenna Hungária Rt next Monday, Antenna Hungária said after stock exchange hours. ÁPV intends to sell the stake to ‘an investor with adequate strategic experience, soundreferences and a solid financial position’ in a two-round open tender. The invitation to submit offers will be

published in two national dailies as well as the Financial Times on April 11. The board of the state asset manager ÁPV also proposed that investors are paid Ft 460 dividend per share this year. (Econews; MH 3, Nv 5, NG 11, 12)

Gasoline prices at historic highHungary’s dominant fuel retailer MOL Rt announced a fresh increase in its gasoline and diesel prices boostingfuel prices to an all-time high from Tomorrow. The recent sharp rise in oil prices, coupled with a firmer dollar maythreaten otherwise favorable inflation prospects and may make the central bank more cautious about rate cuts,analysts warn. MOL said the benchmark gasoline price will rise by Ft 7 to Ft 258.50 per liter, while the price of diesel will increase by Ft 5 to Ft 252 per liter. With the hikes MOL said yesterday, benchmark gasoline priceincreases have added up to 13.1% since the beginning of this year, with the price up 7.9% over the past month.(Econews; NG 1,3,11,12, Nv 1, 5, MH 11)

Kika to spend Ft 10 bln on expansion Austria’s Kika, a home furnishings retailer, plans to spend more than Ft 10 billion to expand its network in

Hungary, Attila Juhász, the managing director of Kika’s Hungarian unit, said yesterday. Kika, which already hasthree stores in and around Budapest, will open superstores in Györ (W Hungary), Pécs (S Hungary) andDebrecen (E Hungary) this year. Kika will also open a discount store in Tatabánya (NW Hungary) in May or June.Over the next three years, Kika will open more stores in Miskolc (NE Hungary) and Szeged (S Hungary). Kika ismarket leader on the home furnishings market, along with IKEA, Juhász said, adding that other competitors canbe expected to enter the market in a couple of years. (Econews; NG 4, MH 12)

Macropolis set for MiskolcInternational Investment Holding Rt is to build a new commercial center in Miskolc called Macropolis, thecompany’s head of sales, Roshal Grigorij, told Népszabadság. The over 6000-sqm property will includeapartments, office buildings and underground garages, and is estimated to reach Ft 5 billion. The 5 and 6-story, 4-building complex is to give home to 180 apartments, and to a shopping mall with a 2-story garage, designatedpartly to the homeowners and partly to customers. The project is due for completion in the summer of 2006. (Nb

4) E.C.E. On increase stake in two companiesE.On Hungária Rt has obtained the majority of equity shares in two gas supply companies, Kögáz Rt. and Dd GázRt, this week. With the transaction E.On’s ownership rose from 30.23% to 70.88% in Kögáz Rt, and from 49.99%to 50.1% in Dd Gáz Rt. The Hungarian Energy Office and The Competition Office authorized the purchase of theequity shares. (Ng, 5) Fr. Sz.

IBM recruitingIBM announced within the past few days that the company is now looking for highly qualified people withuniversity degree for 250 open positions in areas like IT system supervision, finance, HR, procurement and callcenter employees. This follows last month’s announcement by IBM on plans to move further operations toHungary resulting in the eventual creation of some 700 jobs. The company is setting up its Business SupportCenter and IT Service Center in Székesfehérvár. (NG 1, 5) Fr. Sz.

No bids for Tisza Cip?There were no bids offered on the purchasing of Tisza Cip?’s stocks until the April 5 deadline. The ex-socialistenterprise, which is still 99.37% state-owned, has a Ft 879 million registered capital, yet received no offers. Asthis is the second time that the privatization attempt was unsuccessful, by law, it is now allowed to negotiate itsprivatization without a tender, explained communication department head Péter Oravecz of the State Privatizationand Holding Rt (ÁPV) to Világgazdaság. (Vg Thu 13) E.C.

Borsodi brewery’s revenue falls 5%Hungary’s Borsodi brewery, owned by Belgium’s Interbrew, recorded sales revenue of Ft 39.7 billion last year, 5%less than a year earlier, communications director Imre Feher said yesterday. Profits fell even more, he added,without providing figures. This year Borsodi plans to brew more beer, while making more revenue and more profit,Fehér said. Last year Borsodi Sörgyár sold 2.27 million hectolitres of beer, 2% less than in 2003. The decline wasstill not as steep as the market’s: about 6% less beer was sold in Hungary last year compared to 2003. Since

Hungary joined the EU in May 2004, the market has been flooded with cheap canned beer, posing a seriousproblem for all Hungarian brewers, Fehér said. (Econews; NG 5, MH 12)

19




Elektrolux begins operations in new plantMost modern vacuum cleaners are now being produced in Electrolux’s newest production facility, which wasofficially openned yesterday. Electrolux has already consolidated a another vacuum cleaner production hall inHungary, from which 1.88 million pieces a year were sold worldwide. The new Jászberény-based factory employs200 people on 6500 sqm, where they assemble a new machine every 5 seconds using 17 conveyor belts, whichresults in a daily output of 13200 products. With this investment, Jászberény now produces 19 differentcommodities and aims to increase its sales to 2.5 million devices a year. (Nb 11) E.C.

Allianz starts health insurance fund Allianz Hungária Rt, Hungary’s biggest insurance company, has started a new health insurance fund, boardchairman Ferenc Temesi said yesterday. The health insurance fund already has 10,000 members—enough tobreak even, according to Temesi—and Allianz aims to gain more by drawing from its pool of 2.3 million policyholders, including 100,000 who are employers. There are currently 60 health insurance funds operating inHungary, but the market is expected to consolidate in the next couple of years, just as the market for pensionfunds has. Allianz Hungária is not ruling out the possibility of acquiring some of these health insurance funds, András Közek, who heads the Life and Pension Insurance Division, said. (Econews; NG 4, MH 12)

Richter may face legal actionMSD Kft, an affiliate of Merck is considering legal actions against two generic pharmaceutical companies Richter Rt and Teva Rt for the launch of new drugs. MSD claims that it sill has the patent rights on the medicine. Richter’sand Teva’s new generic drugs are 30% cheaper than the actual organic medicine on the market. Richter has beenexpecting MSD’s actions, Erik Bogsch, Richter CEO said. András Vajda, MSD representative said, the company isready to file a suit against both companies to enforce its rights on the generic drug. (NG 11, 12) Fr. Sz.

Szobi Szörp acquired by managementThe management of Hungary’s Szobi Szörp, a maker of drink syrup, bought a 90% stake in the company fromFrench peer Teisseire, business weekly HVG. The sale is part of Teisseire’s strategy to sell the majority stakes inits foreign units and operate them as franchises. Teisseire is retaining an 8.8% stake in Szobi Szörp. Szobi Szörphad after-tax profit of Ft 300 million on revenue of Ft 4.8 billion last year. Szobi Szörp’s capital was raised beforethe sale in order to bring net assets up to the required minimum or two-thirds of registered capital. (Econews)

Jysk opens first store in HungaryJysk, a Danish seller of competitively-priced home furnishings and textile, opened its first store in Hungaryyesterday, in a shopping mall just outside of the capital. Jysk plans to open between six and eight more 1,000sqm stores in Hungary this year, Peter Kistamás, Jysk’s country manager in Hungary, said in the latest issue of business weekly Figyel?. Starting next year, Jysk plans to open 10-12 stores a year in Hungary. Jysk opened itsfirst store in the region, in Poland, five years ago, and it has been in the Czech Republic for 3 years, but thecompany waited until after EU expansion to enter the Hungarian market. (Econews)

Regional ’paper to build Ft 1.5 bln HQDélmagyarország, a daily newspaper for Csongrád County (SE Hungary), is building a new Ft 1.5 billionheadquarters, Klára Pap, who manages the newspaper’s publisher, said yesterday. The new headquarters, whichwill be finished by Q2 2006, will be paid for with the newspaper’s own resources as well as money from its owner,the UK’s Daily Mail Group. The Daily Mail Group bought Délmagyarország, along with its printers and itsdistributors, in 2000. (Econews)

EconomicsIndustrial output up by 1.3 % yr/yr Industrial output was up by 1.3 % year-on-year in February 2005, according to preliminary figures issued by the

Central Statistics Office (KSH) yesterday. In working day-adjusted figures the increases was 1.6 %. Productionvolumes were 2 % higher yr/yr for the first two months of 2005. However, the seasonally and working-dayadjusted industrial output index for February was down by 0.3 % against January of the same year. In January,the seasonally and working-day adjusted volume of industrial output rose by 0.7 % compared to Dec, and by 2.7% yr/yr. In 2004, industrial output was up by 8.3 % over 2003. (MTI; NG 3, MH 3)

Visa card holders purchases up 11.6%The number of bank and credit cards bearing the Visa logo issued in Hungary last year rose 10% from 2003 to2.4 million. Visa cardholders spent Euro 5.9 billion in Hungary with their cards last year, 11.6% more than in 2003.Spending using Visa credit cards rose 32% in 2004 to Euro 180 million. Point-of-sale (POS) purchases by Visacardholders in Hungary amounted to Euro 949.2 million last year, 24% more than in 2003. (Econews; NG 5, MH13)

20




Euro 110 mln invested in 40 transactionsVenture and private capital worth Euro 110 million was invested in more than 40 transactions in Hungary last year,the Hungarian Venture Capital and Private Equity Association (MKME) estimated yesterday. The 20 pulloutsregistered last year were more than triple the figure a year earlier, which investors can regard as a positive sign,the association said. More than 70 venture capital and private equity funds have invested Euro 1.6 billion in morethan 500 Hungarian companies over the last 15 years, according to MKME’s figures. (Econews; MH 11)

KNPA criticized

The expenditures of the Central Nuclear Financial Fund (KNPA) did not follow the mid and long term plansbetween 2000-2004, the State Audit Office report said. The activities of National Nuclear Energy Office (OAH)was criticized by the ÁSz for spending an annual Ft 20.7 million on Nuclear Waste Maintenance Kht’s (RHK)rental fees, Ft 39.4 million on the dismissal of its CEO. A part of the fund was spent on infrastructure developmentfor getting the inhabitants support. Ft 828 billion of KNPA is destined to investments until 2108. ÁSz suggestsstricter monitoring of the fund’s expenditures. (Fr, Ng 3)

Energy budgeting by means of cardFrom 1 July there will be an alternative means of measuring electric power consumption. This electric meter usedwith a card will ensure a limited but uninterrupted electric power supply for financially challenged families whocan’t afford to pay the bills. Requests can be submitted from 15 April on, said Social Minister Kinga Göncz. Elm?Rt will install the appliance free of charge and give free cards worth 110 kWh, but additional electric power canalso be bought for Ft 28 per kW. The investment will be funded by both the central budget and by the electricitysupply provider. In the experimental stage 1500 families will be included in the program, though there are 20,000households with their electric power supply having been cut off. (Nv 4) K.H.

International reserves up Euro 64 mlnHungary’s international reserves stood at Euro 13.355 billion at the end of March 2005, up a slight Euro 64 millionfrom the end of February, according to preliminary figures published by the National Bank of Hungary (MNB)yesterday. The MNB’s international reserves rose Euro 1.652 billion from the end of last year. The big increasewas probably the result of two large foreign bond issues, worth a combined Euro 2.2 billion, at the start of theyear. (Econews)

Consumer confidence up 1% in Q1Consumers were more upbeat in the first quarter of 2005 compared to late last year, research firm Ecostat saidyesterday. The confidence reading was 42.3% in the first quarter, up from 41.3% in the fourth quarter of 2004,according to Ecostat’s survey. Some 58% of households say their situation was average, 20% said it was poor,while 5% described it as very poor. This compares to 16% who said their financial situation was good, and just 1%that termed it as very good. (Econews)PoliticsPM, Pres, party heads attend papal funeral Attending the funeral of Pope John Paul II in Rome this morning are Hungary’s President Ferenc Mádl, PrimeMinister Ferenc Gyurcsány, House Speaker Katalin Szili and Supreme Court Chief Justice Zoltán Lomnici. Senior officials from each of Hungary’s parliamentary parties are among public dignitaries at the ceremony. The maingoverning Socialist Party is represented by Spokesman István Nyakó and Lutheran minister László Donáth, andits junior partner, the liberal Free Democrats, by MP Imre Mécs. The main opposition Fidesz party’s delegationcomprises of Chairman Viktor Orbán, Christian Democratic People’s Party head Zsolt Semjén and ChristianDemocratic Alliance Chairman Péter Harrach. The smaller opposition Democratic Forum is represented by itsleader Ibolya Dávid. (MTI; Nv 1, Nb 8)

DomesticFt 2 bln archeological park An eco tourism and regionally historical site is to be excavated and developed by the Polgár exit of M3. The firstarcheological leisure park will show the troves of the flora and fauna of the North-Alföld region partly in akunhalom (ritual burial place) shaped museum, partly in tents. The three phases of the investment cost a total of over Ft 2 billion, Ft 974 million of which is a non-refundable subsidy awarded to the Hajdú-Bihar countymunicipality as part of the regional development operative program. (Nb 1) E.C.

Former parliamentary consultant convicted A former parliamentary official was sentenced to prison for forging documents and bribery by Budapest’sMunicipal Court, MTI learnt yesterday. László Boros took bribes from several foreigners, mainly Arabs, to getHungarian citizenship while working for the Office of Parliament between 1996 and 2000. Boros was handeddown a prison sentence of 2 years, 11 months. Using his contacts with public administration authorities, Borosearned up to Euro 800 in each case for smoothing the way for applicants to pass the Hungarian examination,which is necessary for citizenship. (MTI; MH 2, Nv 4)

Watchdog says TV broke law when pope died

21




Public TV’s failure to break off programming when John Paul II died on Saturday evening violated the law, theofficial media watchdog said yesterday. Neither public service channel provided comprehensive and preciseinformation in due time, as specified by the media law, the National Radio and Television Board (ORTT) said. Themain channel of Hungarian television (MTV) provided the news via a ticker at the bottom of the screen. But itsrelay of a U.S. action film was broken off only 24 minutes later, while its second channel failed to deal with theissue during that period, ORTT’s spokesperson said. MTV President Zoltán Rudi fired György Nika from his job asnews director on Tuesday, saying he was personally responsible for the delay. (MTI; Nb 2, MH 2, Nv 3)

StocksBUX Close: 17558.15 Change: -81.63, (-0.46%)Stock Closing price Daily change (%) Average price VolumeMOL 16,800 -1 16,885 443,769Matáv 871 -1 878 1,353,449OTP 6,675 0.8 6,650 445,397Richter 26,010 -1.1 26,379 33,989Egis 17,200 0 17,317 8,073 Antenna 4,550 -0.9 4,517 11,021TVK 5,170 2 5,119 9558Rába 740 0 736 5,864Budapest Stock Exchange

Exchange RatesFIXED MIDDLE RATE In forints Apr 7, 2005 National Bank of HungaryEUR 1 246.20USD 1 190.54GBP 1 358.35CHF 1 158.89JPY 100 176.12CZK 1 8.22PLN 1 59.96

Weather

Tomorrow: rainHigh 13°C (55°F)Low 11°C (51°F)

22




11 April 2005Business

GVH approves Ringier control of daily

Reviewing its earlier decision, the Competition Office (GVH) has allegedly given its preliminary approval for theDutch subsidiary of Swiss Ringier AG to assume control of Népszabadság Publishing and Printing Rt as amajority owner, business daily Napi Gazdaság reported citing unnamed sources. Having acquired a 49.97% stake

in the publisher of Hungary's most popular broadsheet, Ringier bought another 17.68% of the shares in 2003;however a GVH ruling prevented its from exercising its rights as majority owner. The second GVH decision cameafter a court verdict that required the competition authority to reconsider the issue. The final decision will becontingent on Ringier's willingness to make certain concessions to guarantee that it will not abuse its alreadyoverwhelming dominance in the Hungarian broadsheet market. (NG 1) P.P.

Antenna AGM approves whopping dividend

A Thursday AGM of state-owned terrestrial broadcaster Antenna Hungária Rt approved payment of a Ft 5.462billion dividend, the company said on Friday. Antenna Hungária will pay last year's entire unconsolidated after-taxprofit of Ft 1.352 billion as well as Ft 4.11 billion in profit reserves. The dividend, equivalent to 46% of the facevalue of all shares, was probably the last the state will take out of Antenna Hungária before it sells it. The StatePrivatization and Holding Company earlier said it was selling its 75%-plus-one-vote stake in Antenna Hungáriaand would publish an invitation for bids in a two-round tender on April 11. (Econews; NG 7, BBJ Online, Sat MH

11)OTP tops "quality company" list

Hungary's OTP Bank Rt is the highest-ranking company on a list of quality companies in the Eastern Europeanregion compiled by global capital markets journal Euromoney. In its April issue, Euromoney published a list of 336companies in the region, ranked by 45 analysts and investment companies. OTP Bank was cited for the "mostconvincing and coherent business strategy" of any company in the region. Analysts who assessed OTP Bank for the issue noted the bank's results are excellent, but falling interest rates could hurt its profitability. (Econews; NG7, Sat Nb 11)

Kartonpack to offload Novoprint

Packaging manufacturer Kartonpack Rt, which is listed on the Budapest Stock Exchange (BÉT) but in fact has notbeen traded for 1.5 years, has announced plans to offload Novoprint Rt, a printing and publishing company in

which it held a 93.18 majority stake from July 2004 until recently. Kartonpack has already divested the 42% of Novoprint shares it acquired last summer to an unidentified investor, and it also has an option to sell theremaining 51.18% in six months, the company said in a stock market announcement. (NG 7) P.P.

Stock Exchange up 0.3% last week

The Budapest Stock Exchange BUX index grew 0.3% this past week to close at 17,458.16 points on Friday.Trading was characterized by moderate turnover and mixed price trends. Overall trading amounted to Ft 85.55 asagainst Ft 64.5 billion during the preceding four-day week. The BUMIX index, reflecting the rates of low- andmedium-capitalization stocks, increased by 1.6%, to 1,553 points. Two of the four blue chips firmed last week:MOL Rt gained 2.92% in value and Richter Rt 2.73%. OTP Rt practically stagnated while Matáv Rt lost 4.2%.(MTI; MH 3, Nv 5)

Porsche optimistic

Porsche Hungária Kft hopes to sell 43,000 cars this year despite a worse than expected Q1, the companyannounced. During the first three months of the year, the dealership sold 7866 automobiles, compared to the8,328 sold in Q1 of 2004. Porsche Hungária strongly believes the sales turnover of upcoming nine months willmake up for the lackluster beginning of 2005. (MH 13) P.?.

Malév to utilize Sármellek

Some of the planned new flights of the Hungarian airlines Malév Rt will depart from the Sármellék airport by LakeBalaton instead of Ferihegy, unnamed sources close to the company reported. Malév is also mulling flightsdirectly connecting European cities, sources added. As part of a major restructuring program, the company is tolay off several hundred of its current workforce, partly by outsourcing numerous lines of business, and by leasingout pilots. Operator of the Sármellék airport, the Irish-Hungarian Cape Clear Aviation Kft just recently kicked off aFt 2 billion development project at the airport to reach EU standards. (MH 1) P.?.

23




CIB Fund starts off with Ft 2.638 bln

CIB Bank Rt said on Friday that it had started its CIB Guaranteed Capital fund with subscriptions worth Ft 2.638billion. The subscription period ended on March 31 and the three-year fund was registered by the HungarianFinancial Supervisory Authority (PSzÁF) on April 6. The fund will invest in the Standard and Poor's 500 index of U.S. shares, the DJ-AIG index of commodities and U.S. dollars. The best performing of the three will account for 50% of the fund's yield, the second-best for 30% and the third-best for 20%. Investors will get 91.75% of thefund's yield. (Econews)

OTP Rom. Subsidiary to open 22 branches

Banca Comerciala RoBank SA, the recently acquired Romanian subsidiary of OTP Bank Rt, will start its life under the new management by opening 22 new branches in major cities and smaller regional centers, President TonyFekete told Napi Gazdaság. In the meantime, transactions between Hungarian and Romanian OTP branches willalso be sped up, with bank transfers within the group to expected to reach their destination within 24 hours,RoBank Deputy CEO in charge of commercial banking Vlad Micu added. The bank puts an emphasis on servingethnic Hungarians in Romania with services in their mother tongue. According to Andreea Rosca, chief editor of Romania's leading business daily Capital, the Romanian press is not hostile to Hungarian investors such as OTPor Hungarian oil and gas company MOL Rt, which has recently acquired the remaining Shell units in the country.(NG 4) P.P.

Hochtief buys control of Mélyépít?

Hochtief AG, Germany's biggest construction company, said it agreed to buy a majority stake in Hungarian builder Mélyépít?, for an undisclosed price, taking advantage of growing demand for construction work there. Hochtief isto purchase 76 % of the 220-employee company, which is Hungary's No. 2 independent construction servicesprovider, Essen-based Hochtief said in a statement yesterday. The transaction is effective from Jan 1, 2005. Chief Executive Hans-Peter Keitel, 57, has expanded abroad and into the services business to make up for a decade-long slump in the construction industry at home. (Bloomberg)

Malév Boeings to fly to China instead of America

Hungarian Airlines Malév Rt may lease its two long-haul Boeing 767 aircraft to its Chinese partner Hainan Airlinesfrom this autumn to fly to Beijing, according to unnamed sources. Currently Malév flies with these planes to NewYork and Toronto, which flights may stop operating if the planes are sent to China. Currently, Malév's New Yorkand Toronto flights are the only direct links between Budapest and North America. Hainan already operates aflight of its own to Beijing, but only with an economy class plane. (Nb 12) M.K.

Logistics center in Soroksár underway

Hungary's largest logistics facility is currently under construction on the outskirts of Soroksár, south of Budapest,unnamed sources reported. The so-called Intermodal Logistics Center will occupy a land of almost 100 hectaresby 2010, when the project is scheduled to be completed. During the first phase, between 2002 and 2006, awarehouse with a ground-space of 110 sq.m. and a 6,000-sq.m. office building is being built. (MH 11) P.?.

Kingspan opens Ft 2.5 bln factory

Kingspan Ltd, an Irish maker of building materials, opened a new Ft 2.5 billion plant just outside of Budapest onFriday. The plant, built on a greenfield site, will turn out 3 million square meters of insulated panels a year when itreaches full capacity, generating annual revenue of Ft 10 billion. The 8,000sqm plant will employ 40 people at thestart, but Kingspan could put double that number on its payroll later. Kinspan aims to control as much as half of

the market for insulated panels in Hungary. (Econews)VERT calls off sale of Bánhida

Vértesi Er őmű (VERT) has called off the sale of its Bánhida power plant after the buyer, Kárpát Energo, which isowned by Hungary's former minister of industry László Kapolyi, failed to obtain the necessary permits to switchthe coal-powered plant over to gas. VERT shut the plant down at the end of 2004. VERT, which owns other power plants as well, announced at its AGM on Friday that it had invalidated the contract from March 30. Vilmos Holló,who heads VERT's board, said the company would have to pay back an advance payment of Ft 470 million fromKárpát Energo. Kárpát agreed to buy the plant for Ft 2.3 billion. He added that targets in VERT's business plan for 2005 were calculated with the proceeds from the sale. In spite of this, VERT's AGM approved the plan on Friday.(Econews)

24




Economics

2-month trade deficit up Euro 110 mln

Hungary's foreign trade deficit was Euro 478 million in the first two months of 2005, up Euro 110 million from thesame period one year earlier, according to preliminary figures announced by the Central Statistics Office (KSH)on Friday. Exports rose 9.8% yr/yr to Euro 7 billion, while imports increased 10.9% to Euro 7.478 billion. Exportsgrew at a rate between 4 and 5 percentage points faster than imports in Q4 2004, but imports grew faster thanexports in the first two months of 2005. In February alone exports rose 8.5% yr/yr to Euro 3.554 billion andimports increased 8.3% to Euro 3.857 billion, resulting a deficit of Euro 303 million. (Econews; NG 3)

OEP's Jan-Mar deficit Ft 104.4 Bln

With revenues and expenditure exceeding the quarterly target by a respective Ft 5.1 billion and Ft 24.2 billion, theNational Health Administration Fund's (OEP) deficit totaled Ft 104.4 billion between January and March. If advance payments to medical service providers are taken into account, the deficit is still as much as Ft 85.2billion. The state spent Ft 84.1 billion on drug subsidies in the first three months of the year. Meanwhile, thenational pension fund had a Ft 32 billion financing gap at the end of March, compared with a positive balance of Ft 27 billion in February. The combined 2005 deficit of the two funds is set at Ft 341.3 in the budget, however thisis a very conservative estimate, analysts say. (NG 3) P.P.

Hungarians still largely owner/occupier

The vast majority of Hungarians are still owner-occupiers, with the rental sector accounting for a negligible 2% of all housing, research institute Ecostat Rt found in a research project investigating the underlying causes of Hungary's infamously low population mobility. 18% of Hungarians have never moved house, while more than athird of the population have had only two homes in their lifetime. Currently, 6% of the country's inhabitants areplanning to buy a new home. 35% of these acquisitions would be starter homes, while 45% of the prospectivebuyers are looking to move into a larger property. For 20%, the motivation is to move to a different part of thecountry, and 12% seek to invest. (NG 17) P.P.

Hotel occupancy rate up at 55.2%

Hungary's hotels had an average occupancy rate of 55.2% in March, and guests spent 10.2% more nights inhotels than a year earlier, the Central Statistics Office (KSH) reported on Friday. Hotels had an averageoccupancy rate of 46.2% in the first quarter this year, and guests spent 9.4% more nights in hotels than in thesame period a year earlier. In January-March 2004, Hungarian hotels had an average occupancy rate of 45.8%

and guest nights rose 20.4% yr/yr. The gross average room rate was Ft 12,902 in March this year, up from Ft11,160 a year earlier. (Econews; NG 3)

Wage increase would mean real estate boom

According to the managing director of IT and economic research company DEM Kft, a considerable rise of realwages would result in a boom on the housing market. Dénes Varga said real wages should increase by 3 % everyyear, on top of the inflation figures, to stimulate a dynamic growth of demand in the market. There is also ashortage of tenement flats, but the 30%-35% ratio experienced in other European countries would be unduly highin Hungary, Varga added. (Nv 5) P.?.

Stock of outstanding bonds up Ft 900 mln

HVB Mortgage Bank's (HVBJ) stock of outstanding mortgage bonds rose Ft 900 million in the Q1 2005 to Ft65.404 billion, the bank said on Friday. Including interest, the bonds add up to Ft 93.772 billion in liabilities for

HVBJ. HVBJ had coverage of Ft 122 billion, giving it a coverage rate of 130% for the bonds. Assets and interestcomprised 95% of coverage and government securities accounted for the rest. HVBJ issued mortgage bondsworth Ft 7.3 billion in Q1, and repurchased Ft 6.4 billion worth. (Econews)Politics

MSzP delegation gets free mandate

The delegation of the Hungarian Socialist Party (MSzP) has received a free mandate from the party's board tonegotiate about the candidates of the President of Hungary with the Alliance of Free Democrats (SzDSz). MSzP'sboard was supposed to approve the socialist candidate's name on Saturday, but they rather kept the issue open.Chairman of MSzP István Hiller said their no. 1 candidate was Speaker of Parliament Katalin Szili, however SzDSz was not willing to accept anyone with a strong party affiliation. (Nb 1) M.K.

25




Parties settle dispute over agents

The two governing parties settled their last dispute over a bill on opening the files of the former communist secretservices and exposing one-time informants yesterday. The Socialists (MSzP) and their junior partner FreeDemocrats (SzDSz) agreed that data on secret services officers who continued to work at national securityservices after the collapse of the communist regime in 1990 could only be made public ten years after leaving theservice. "Backed by both governing parties, the bill has now become ripe for being enacted," SzDSz ExecutiveGábor Fodor said yesterday. (MTI; Nv 1, Nb 3)

Court rules against Pokorni

A top opposition Fidesz politician was wrong to claim that Prime Minister Ferenc Gyurcsány was guilty of a conflictof interest, a court ruled on Friday. Gyurcsány sued Zoltán Pokorni, Fidesz's deputy leader, for claiming he hadpassed control of a state-owned publisher to a business partner. However, the judge said Pokorni's statement thatthe prime minister should have more careful to avoid the mere appearance of a connection between his past as abusinessman and the decisions of the privatization holding company ÁPV that operates under his control, was apersonal opinion not subject to defamation laws. (MTI; Sat Nb 4)Domestic

Hungary to have 9 mln population by 2050

The number of Hungarian population may decline under 9 million by 2050, according to the statistics office of theEuropean Union. That means Hungary's population may decline by 11.9% of the current population, as birth rateis not high enough and immigration is not strong enough. The population of the whole EU is expected to increasefrom 457 million to 470 million by 2025, then it may shrink by 20 million again by 2050. In 2050 only Sweden,Ireland, Cyprus, Malta and Luxembourg will grow in population, according to EU research. (Sat. Nb 21) M.K.

Subway to reach Bosnyák tér in 2010

Subway no. 4 in Budapest may reach Bosnyák tér, Dist. 14 in 2010, if construction works are not halted after opening the first section of the line in 2009, Budapest local council said. The first section between KosztolányiDezs? tér, Dist. 11 and Baross tér, Dist. 7, is already being constructed. The tunnels of the 7.4-km first section willbe built from September next year, while the stations from two months earlier. (Sat. Nb 6) M.K.Stockwatch

BUX Close: 17458.16 Change: -99.99, ( -0.57%)

Stock Closing price Daily change (%) Average price Volume MOL 16,560 -1.4 16,556 335,620 Matáv 862 -1 866 1,878,294 OTP 6,621 -0.8 6,630 324,114 Richter 26,350 1.3 26,312 2,260 Egis 17,350 0.9 17,356 4,982 Antenna 4,550 0 4,489 36,542 TVK 5,175 0.1 5,138 2,423 Rába 735 -0.7 733 2,977 Exchange

FIXED MIDDLE RATE In forints

Apr 8, 2005 National Bank of Hungary EUR 1 246.29 USD 1 191.99 GBP 1 358.79 CHF 1 158.89 JPY 100 176.71 CZK 1 8.22 PLN 1 59.88 Weather

Tomorrow: rain

High 19°C (66°F)

Low 12°C (53°F)

Documents

7Days, 2005. április 11. (PDF-ből)