INTERNAL AFFAIRS 26.07.2004 - Gallup: Fidesz increased its advantage 28.07.

2004 - Powell came to praise Hungary FOREIGN AFFAIRS 27.07.2004 - Hungary expects to have EUR 3 billion MACROECONOMY 26.07.2004 - Invasion in money markets - New privatisation wave to come 29.07.2004 - Oil price at record levels - Socialists expecting a rate cut 30.07.2004 - HUF at its annual record - Increasing Hungarian capital export - Stagnating unemployment BANK 27.07.2004 - MKB increased its profit by 10 percent 28.07.2004 - Hungarians indebted in foreign currency - Subsidised home loan also for foreigners 30.07.2004 - KDB: more than half of a billion forints in six months HEAVY INDUSTRY 26.07.2004 - Hungarian spare parts in Slovakia - NABI buses in Los Angeles 28.07.2004 - Suzuki case on second hearing 30.07.2004 - Appeal against the search for gold - CVT production to be stopped CHEMICAL INDUSTRY 27.07.2004 - AstraZeneca to carry on research activities 30.07.2004 - Pharmaceutical companies about expected losses - Richter: 17.5 billion profit ENERGY INDUSTRY 30.07.2004 - Yukos can deliver ELECTRONICS 27.07.2004 - Elcoteq struggling with labour problems 28.07.2004 - Epson to come to Hungary? TELECOMMUNICATION 26.07.2004 - Matáv numbers portable 28.07.2004 - Pannon GSM: 18 billions profit in six months - Vodafone’s subscribers basis increased significantly INFORMATION TECHNOLOGY 27.07.2004 - Sulinet Express slowing down PAPER- AND PRINTING INDUSTRY 27.07.2004 - Kartonpack increased influence in Novoprint FOOD INDUSTRY 27.07.2004 - Preserving sugar beet quota a Hungarian interest - Sugar import facing restrictions 30.07.2004 - Zwack: the 750 forint profit can be achieved this year as well

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TRADE, FAIRS 27.07.2004 - Car dealers to decrease diesel car prices through tax modifications - Summit Rt. changed its name 28.07.2004 - Smaller hypermarkets from Tesco - Audi TT will be manufactured in Gyõr in the future as well 30.07.2004 - Car importers are waiting TRAFFIC, TRANSPORT 29.07.2004 - In search of a buyer for Malév - Union driving licence from August 30.07.2004 - Air tickets from the Internet - Malév high in the sky TOURISM, HOSPITALITY 27.07.2004 - Subway opened its first outlet in Budapest INVESTMENT, DEVELOPMENT 26.07.2004 - Diageo to expand in Budapest - Eight billion forints investment in the industrial park of Pápa - Getronics moves its centre office to Hungary - Tesco to erect hypermarket in Komárom - Budaörs to sell HUF 1 billion plot 27.07.2004 - Plaza Centers selling shopping centres 28.07.2004 - BorgWarner to build additional plant - Program to lure capital for investors - GE to enlarge its base in Nagykanizsa? 30.07.2004 - ACG preparing for a development of sixty million euros SECURITIES’ MARKETS 26.07.2004 - Bourse is in for a nice future - Flash reports to come out MUNICIPALITY 26.07.2004 - Suzuki forced to pay fine MEDIA 26.07.2004 - Satellite televisions channels emigrating

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INTERNAL AFFAIRS - 26.07.2004 Gallup: Fidesz increased its advantage
Should parliamentary elections be held this Sunday, 25 percent of whole population would vote for governing Hungarian Socialist Party MSZP, whilst largest opposition force Fidesz Hungarian Civic Alliance could count on a support base of 37 percent - the July survey of pollster Gallup reveals. Compared to figures measured two months ago, Fidesz could increase its results by 5, whilst MSZP by 3 percent in terms of whole population. Thus, Fidesz’ popularity is higher than in has ever been earlier in this governing cycle. Junior coalition partner Alliance of Free Democrats SZDSZ would have 5 percent of votes with opposition Hungarian Democratic Forum MDF at 3 percent. 53 percent of those with a clear party preference would vote for Fidesz, whilst the corresponding figure for MSZP stands at 32 percent with SZDSZ at 8 percent and MDF at 3 percent. One month after the European Parliamentary elections, a much larger part of Hungarian people has party preference than earlier: after 44 percent measured in May, now 50 percent of the population has preference. As for the assessment of the Prime Minister’s work, there have been no changes: 49 percent of Hungarians state that Péter Medgyessy carries out his duties poorly with 36 percent having the opposite opinion. (NSZ, 24 July, p 4, MN, 24 July, p 3, MH, 26 July, p 3)

INTERNAL AFFAIRS - 28.07.2004 Powell came to praise Hungary
State of Secretary Colin Powell has praised Hungary for its mission in Afghanistan and Iraq. Powell was a guest of honour in the annual meeting of Hungarian ambassadors. He underlined that allied forces have liberated the world from two dictatorships through intervening in these countries. He supported the suggestion of Hungarian Foreign Minister László Kovács that the so-called centre of democracy should be set up in Budapest. The centre would collect and make use of experiences of Central and Eastern European transition. As for visa obligations for Hungarians, Powell’s visit has not made a breakthrough: without mentioning any concrete things, he only promised that Hungarians would get American visa easier. Speaker of parliament Katalin Szili presented Powell with the Order of the Hungarian Republic. The visit of the State of Secretary pushed that of Javier Solana to the background. The European Union’s Main Commissioner in charge of foreign and safety policy held a lecture for Hungarian ambassadors, admitting among others that the United States and the European Union does not agree in everything. He stated that the Union should play a more active international role. (MH, p 6 and 7, Nszab, p 1 and 2, NSZ, p 1 and 2)

FOREIGN AFFAIRS, EUROPEAN UNION - 27.07.2004 Hungary expects to have EUR 3 billion
Hungarian diplomats will have to fight and get EUR 3 billion from the European Union. This is the task that was put forward by Foreign Minister László Kovács in the meeting with leaders of Hungarian diplomatic missions abroad yesterday. He emphasised that everyone has to do their best to achieve an at least 4 percent of GDP Union fund in the budget for the period between 2007 and 2013. He added that both the earlier and current governments fared very well when it comes to the accession process to the European Union. The conference was attended by Zsolt Németh, Chairman of the Parliament?s foreign committee from opposition Fidesz Hungarian Civic Alliance. Chairwoman of Parliament Katalin Szili and Minister of Transportation and Economics István Csillag both addressed the meeting. Today will see a speech to Hungarian diplomats by American Secretary of State Colin Powell and Main Representative of European Union in charge of foreign policy and security matters Javier Solana. (MH, p 1 and 6, Nszab, p 2, NSZ, p 2)

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MACROECONOMY - 26.07.2004 Invasion in money markets
Since Hungary’s entrance to the European Union, 75 companies have reported to the financial market watchdog PSZÁF that they would like to start operations going through borders in Hungary with 61 of them headquartered in Great Britain. Among entrants we can find largest banks of the world (British HSBC, Swiss UBS), prime securities firms (Credit Suisse First Boston, Goldmann Sachs International, Dresdner Kleinwort Wasserstein) and insurance companies (Japanese Mitusi Sumimoto, British Lloyd's). Chairman of the supervisory authority István Farkas states that the rush is natural and is likely to get stronger, however, he thinks that presence itself does not mean harsher competition. Expert of the insurance market János Asztalos is of the opinion that the majority of the 23 insurance companies that have arrived recently have an observer position, thus no immediate and sensible changes could be forecast. However, in some special areas price war can be foreseen between new entrants and those that have been present for years. (MH, p 9)

New privatisation wave to come
State Privatisation and Holding Company is to invite bids for the entire state-held stake of Hungexpo Rt. in an open pre-qualification process of two rounds. The majority stake of schoolbook publisher Nemzeti Tankönyvkiadó Rt. and the majority state-held package of porcelain manufacturer Hollóházi Porcelán Rt. will be up for grabs in the same form. The 99.33 percent stake of Mahart Duna-Cargo Kft. will be bought by DDSG-Cargo GmbH for a price of HUF 1.063 billion. (NSZ, 24 July, p 5, MH; 24-25 July, p 12, MN, 24 July, p 1 and 13, VG, 26 July, p 6)

MACROECONOMY - 29.07.2004 Oil price at record levels
The benchmark crude oil barrel price went up by USD 1.21 yesterday to reach USD 43.05, translating into the largest value since oil has become an exchange product in 1983. In a parallel move, the price of Brent oil has moved up to the level seen at the time of the war at USD 39.60. The excessive price increase can be attributed to the fact that insolvent Russian oil giant Yukos had to suspend its oil sales after asked to do so by the Russian Ministry of Justice. As a result, the company stopped four of its production units, thus oil supply on world markets may go down by 1.7 million barrels a day. In a reaction to the tense situation on world markets, Hungarian oil and gas distributor Mol published a statement. In it, it writes that oil supplies go undisturbed and there will not be changes sensible for consumers. Should Yukos stop shipments, Mol can still get necessary oil from other Russian partners, the statement says. In case of emergency, Adriatic oil pipeline and strategic oil stocks, enough for 90 days, can also be an alternative solution. However, there is very small chance that Mol would make use of the latter one. (NG, p 1 and 15)

Socialists expecting a rate cut
Benchmark interest rate could be cut, since the HUF/EUR rate permanently went under 250 in the last days - Imre Szekeres told Reuters. The political state secretary is of the opinion that a HUF/EUR rate between 250 and 255 would be enough to meet the 4 percent inflation goal set for the end of next year. Szekeres thinks that economic processes go in the right direction and both this year’s and next year’s budgets are in line with conditions of introducing the euro in 2010. The central bank’s benchmark interest rate has been standing at 11.5 percent since May. National Bank of Hungary MNB would not like to modify interest levels as long as signs of a lower general government deficit can be seen. The Monetary Council will have its next meeting on interest rates on 16 August, but it can not be excluded that it will be on the agenda of next Monday’s session. (MH, p 9, Nszab, p 13)

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MACROECONOMY - 30.07.2004 HUF at its annual record
Yesterday morning the exchange rate of the euro decreased to the level of HUF 246.5 with weak turnover. This has been unprecedented for more than one year. In the afternoon the forint started to weaken, which many explained by the issuing bank’s intervention. Market experts primarily explain the strengthening of the forint with the transactions of English and German speculators. According to Szilárd Buró, professional of Hamilton, the main reason for the strengthening is weak turnover: since in the low market the course can be influenced with a few ten millions of euros. According to György Barcza, economist of ING, it was possible that MNB’s (National Bank of Hungary) monetary board will decide on a reduction of 25 points on Monday already, despite the fact, that according to the recently established new scheudle of the body they would negotiate the base interest rate on August 16th only. Barcza thinks that if no interest cut took place on Monday, then the board would reduce the governing interest rate by 50 base points at its meeting on August 16th. According to Mariann Trippon, analyst of CIB Bank, the interest decision on Monday mainly depends on the exchange rate of that day. Should the price of the euro decrease below HUF 247, the body will presumably reduce the rate. Currency exchange offices modified their prices as a result of the HUF rate’s strengthening and due to this they made revenues larger than the average. The forint’s strengthening that could be experienced in the past few days does not influence the business of bigger exporters - among them Flextronics and Delco Remy – considerably. Only permanently strong HUF means serious losses for companies. Exporters try to compensate losses arising from exchange rate movements with hedge transactions and long term supplier contracts. (NG p1, 3, VG p1, 13, MH p9, Nszab. p16)

Increasing Hungarian capital export
Capital export floating to destinations outside the European Union increased by 909 million euros last year, which is ten time as much as previous year’s figure, while the capital export to member countries grew from 197 million to 489 euros. The significant growth is due to the acquisition transactions (INA, DSK, Maktel) of Mol (Hungarian Oil and Gas Co.), OTP (National Savings Bank) and Matáv (Hungarian Telecommunication Co.). According to estimations a further increase is expected in capital export and the participation of smaller companies will continuously grow in this process. (VG p1, p3)

MACROECONOMY, LABOUR - 30.07.2004 Stagnating unemployment
Central Statistics Office KSH measured an average unemployment rate of 5.8 percent in the period between April and June, which is 0.3 percent lower than between January and March and this ratio is similar to previous year’s figure for the same period. 67 percent of the population in working age was represented in the labour market. The number of people employed added up to 3.894 million, this is actually the same as last year. The number of unemployed people decreased by one thousand to 242 thousand in the period between April and June. (MH p9)

BANK - 27.07.2004 MKB increased its profit by 10 percent
Magyar Külkereskedelmi Bank Rt. (Hungarian Foreign Trade Bank Co.) closed the first half of the year with a net profit of approximately 10.2 billion forints. This figure exceeds last year’s profit achieved in the same period of time by 10.1 percent. According the bank’s last flash report made on basis of the international accounting standards before the Konzumbank merger, the bank’s balance-sheet footing increased by 21.6 percent to 1358.5 billion forints. (NG p4)

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BANK - 28.07.2004 Hungarians indebted in foreign currency
National Bank of Hungary MNB announced that the stock of retail foreign currency loans exceeded HUF 170 billion at the end of June. The figure is three times as large as a year earlier. May saw a HUF 20 billion increase in accumulated loan figures, whilst in June an increase of HUF 27.8 billion took place. When it comes to outlays, largest item is home loan granted for a period of over five years, the stock of which grew HUF 12.7 billion to HUF 43 billion. More than one-third of long-term real estate loans is granted in foreign currency. Since National Savings Bank OTP and Land Mortgage and Credit Bank FHB started foreign currency loan activities only in summer, next months may bring about a higher pace of expansion than recently. One-fourth of foreign currency mortgage loans is granted free to use. (MH, p 9, NG, p 4)

BANK - 29.07.2004 Subsidised home loan also for foreigners
In the future, citizens of European Union member states may also apply for subsidised home loans in Hungary. The National Housing and Construction Authority (Országos Lakás- és Építésügyi Hivatal) announced that the related government decree is being modified. (NSZ, p 5, MH, p 9, NG; p 4)

BANK - 30.07.2004 KDB: more than half of a billion forints in six months
Korean owned KDB Bank Magyarország Rt. achieved a profit before taxation of 556 million forints in the first half of the year. In line with this the balance sheet footage of the financial institution increased by 56.7 percent to 68.8 billion forintst. This favourable performance is mainly owing to the success of foreign currency products. (NG p4)

HEAVY INDUSTRY - 26.07.2004 Hungarian spare parts in Slovakia
American, German, French, Japanese and Hungarian spare parts producer companies can attain to profit from the fact that Slovakian automotive industry requires import – wrote Frankfurter Allgemeine Zeitung. The 130 Slovakian automotive industrial suppliers achieved an aggregated sales revenue of 2.5 billion euros last year. All Hungarian producer companies polled by Világgazdaság have business connections to at least one Slovakian factory. (VG p6)

NABI buses in Los Angeles
The public transportation company of Los Angeles draws its option for 75 low floor-board level buses. The value of the contract adds up to 25 million dollars, the fulfilment is expected in the beginning next year. (VG p9)

HEAVY INDUSTRY - 28.07.2004 Suzuki case on second hearing
Car manufacturer Magyar Suzuki Rt. is continuously in talks with the self- government of Esztergom. Negotiations concern the HUF 786 million fine levied on Suzuki because of infringement of construction regulations. Esztergom has made the car manufacturer pay, since it started building its new production hall without licence. Communication Director Tamás Tihanyi said that Suzuki would continue its HUF 100 billion investment programme. They have sent their appeal to the construction authority and would like to find a solution through negotiations. The town of Esztergom forwarded its negative resolution to the county’s public administration office, which will be responsible for the second hearing. Representative of the town Sándor Csomor is of the opinion that they have nothing to negotiate with Suzuki, since regulations do not give any room to manoeuvre in cases like this. (MH, p 9)

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HEAVY INDUSTRY - 30.07.2004 Appeal against the search for gold
Velencei-tó Vértes Térségi Fejlesztési Tanács (VVTFT) (Velencei-tó Vértes Region Development Board) appealed against the theoretical search licence related to prescious and colour metals that was issued last month by the Mine Captaincy of Veszprém. According to the appeal that was submitted by VVTFT the area included in the theoretical licence that was issued for Eastmine Kft. being in British hands concerns the protected region of Velencei Lake’s and Vértes’ highlighted recreational area and the mine captaincy’s decree injures the provisions of two acts related to the region and currently being in force. Municipalities of the neighbourhood are also against the search: they indicated that they did not intend to contribute to search drillings, since the settlement plans of the area do not approve such type of land utilisation. (NG p5)

CVT production to be stopped
According to news from Automotive News General Motors’ factory in Szentgotthárd will stop the production of continuous gears. The manufacturing of the so-called CVT gears will cease gradually. The 50 employees engaged in the production of the mentioned components will continue to work in the engine manufacturing department – said Edit Légrádi, PR manager of the Opel factory in Szentgotthárd, who added that the plant continuously applies for actual projects and would continue the production of gasoline engines and gear sticks for trucks. (VG p5)

CHEMICAL INDUSTRY - 27.07.2004 AstraZeneca to carry on research activities
Despite of the fact that the comany’s turnover this year was less than last year’s 18 billion forints, AstraZeneca Magyarország Kft. continues its clinical research activities in Törökbálint. This downswing can be explained by the price stop of pharmaceutical products that came into force in April. (VG p8)

CHEMICAL INDUSTRY - 30.07.2004 Pharmaceutical companies about expected losses
After introducing the company’s flash report yesterday, the general manager of Richter Gedeon Rt., Erik Bogsch revealed a few details about the agreement being in force until the end of 2006 between pharmaceutical producers and the government. Under this, in case the HUF/EUR exchange rate moves by a rate larger than 6.25 percent, the prices would be corrected. The change refers to the average of a longer period of time and the correction would only be due in the following year. According to Richter’s calculations altogether HUF one billion in losses shall be counted on. This is one billion less than what was expected before the agreement. In case of Egis the loss is HUF 720 million, which is less than half of the earlier estimated HUF 1.62 billion. In case of Egis only one-fourth falls on the business year of 2003/2004 and the second instalment of the loss will be charged to the next year. (NG p12)

Richter: 17.5 billion profit
We closed a quarter fair enough – commented the company’s first man Richter Gedeon Rt.’s half year flash report, which was far better than expected. According to the report the pharmaceutical company achieved a record profit of ten billion forints in this quarter, as a result of this the profit of the first six months added up to 17.5 billion forints. The result of the second quarter exceeds base figures by 20 percent, while the half year’s result is 16 percent higher than the base data. The turnover of 60 billion forints achieved in the first six months exceeds previous year’s figure by approximately 10 percent. Due to the freeze of prices of pharmaceutical products in April the domestic sale was weak, in accordance with this issue Mr. Bogsch said: the domestic market is Richter’s least profitable market. on the contrary export worked well: export to the ex member states of the former USSR increased by 36 percent and to the European Union grew by 11 percent. The consolidated figures vary from the parent company’s in a 22.5 higher sales revenue, while the subsidiaries did not improve Richter’s profit for the time being. The general manager expects an increase in the sales revenue (calculated in dollars) of 10 percent in the second half of the year as well. Concerning the eventual privatisation the company leader said merely that much: it would be more fortunate to call the process rather bond issue than privatisation. (NG p11, MH p11)

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ENERGY INDUSTRY - 30.07.2004 Yukos can deliver
Russian authorities withdrew the property sale ban related to the subsidiaries of Yukos. The decree was for the real estate registry and did not limit the production, processing, delivery and sale of oil. Mol stated that according to its understanding Yukos had paid the pipeline export tariff for August and the contracted oil quantity for next month is already started through the Friendship mineral oil pipeline. The Hungarian oil company does not count on setbacks later on either, however it has started negotiations with other Russian companies about supplementing the potentially missing quantity. (NSZ p5, MH p10-11)

ELECTRONICS - 27.07.2004 Elcoteq struggling with labour problems
Finnish-owned Elcoteq Magyarország Kft., operating two plants in Pécs, is struggling with workforce problems, since it can not find enough workers from Baranya county. As a result, some of the production will be outsourced. Representatives of the company have turned to plants in Dombóvár and Tamási. Decision is expected within two weeks. Public Relations Manager of Elcoteq, planning to increase the workforce to 5,000 from the current 4,000, Zoltán Kripl stated that only simple working phases could be outsourced. He added that employing hundreds of those fired from the Sárvár plant of Flextronics was not on the agenda. He reasoned that Sárvár was too far. (VG, p 6)

ELECTRONICS - 28.07.2004 Epson to come to Hungary?
Electronic goods manufacturer Seiko Epson is considering Hungary as one of its eventual places of manufacturing - South China Morning Post cited Vice President of the company Toshio Kimura as saying. Seiko Epson is of the opinion that China is too risky and therefore plans to produce in several countries in the future. At present, 47 percent of its products are manufactured in China. A representative of the company said that the news that they were taking manufacturing to one of Central Europe’s or Baltic States was true. However, there had been no decision made on the size and scene of the investment yet, he concluded. (VG, p 10)

TELECOMMUNICATION - 26.07.2004 Matáv numbers portable
Subscribers of fixed-line telephone service provider Matáv may take their telephone numbers with them if they change their place of living or domicile within the same fee district. According to analyses, 90 percent of telephone line transfers are of this kind with most of the companies changing their domicile within Budapest. (NSZ, p 5)

TELECOMMUNICATION - 28.07.2004 Pannon GSM: 18 billions profit in six months
A Pannon GSM Rt. achieved a sales revenue of 86 billion forints and a profit before taxation of 18.15 billion forints in the first half of the year, compared to the figures 79.5 and 15.7 billion forints realised in previous year’s same period of time. The operating income grew by 17 percent to 19.1 billion forints and the number of subscribers increased by 3 percent to 2.807 million compared to the base period. (NG 4. old.)

TELECOMMUNICATION - 29.07.2004 Vodafone’s subscribers basis increased significantly
The aggregated number of mobile telephone subscriptions added up to 8.21 million by the end of June – announced Nemzeti Hírközlési Hatóság (National Telecommunication Authority). Compared to last month the number of subscribers increased by 63 thousand (0.77 percent), but in comparison with last year’s figure the growth is 12.4 percent. Vodafone increased its market share by 0.28 percentage point to 18.13 percent, T-Mobile’s grew by 0.05 percentage point to 47.68 percent, while on the contrary Pannon GSM’s participation in the market decreased from 34.52 to 34.19 percent. (NSZ 5. old., NG 5. old.)

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INFORMATION TECHNOLOGY - 27.07.2004 Sulinet Express slowing down
After the June figure of HUF 4.13 billion, July could see sales revenue data of Sulinet express products at HUF 388.11 million. The meltdown can be attributed to changes in the conditions of the programme. As of July, only taxpayers with yearly wages of under HUF 4 million can make use of the tax benefit. Besides this, buyers have to have 50 percent as own fund. (MH, p 11)

PAPER- AND PRINTING INDUSTRY - 27.07.2004 Kartonpack increased influence in Novoprint
Kartonpack Rt. seated in Debrecen increased its business share in Novoprint Rt. from 51.18 percent to 93.18 percent. Kartonpack belonging to the interest of Britton group achieved a sales revenue of one billion forints and a profit according to the balance sheet of 62 million forints last year. (MH p13, NSZ p10)

FOOD INDUSTRY - 27.07.2004 Preserving sugar beet quota a Hungarian interest
The sugar product council has qualified European Union reform suggestions on sugar industry too radical and unacceptable. Secretary Zoltán Koczka is of the opinion that national quotas should be preserved to continue production. Under Brussels plans, purchase price of sugar beet would be 20 percent less from next autumn. The Union would compensate 60 percent of the price difference. (NSZ, p 5, MH, p 9)

Sugar import facing restrictions
As of 1 August, maximum 20 kilograms of sugar can be imported to Hungary without paying customs. Deputy State Secretary of the Ministry of Finance Zoltán Sághy said that the measure was brought about the fact that private import of sugar has gone up to above 8,000 tonnes per month, translating into losses of HUF 1.2 billion for the budget every month. In case of bringing sugar into Hungary, we have to give a notification with how many people we are living together with in one household and how much sugar we are importing. (NSZ; p 5, MH, p 9, Nszab, p 15)

FOOD INDUSTRY - 30.07.2004 Zwack: the 750 forint profit can be achieved this year as well
Zwack Unicum Rt. closed the first half of its business year with a gross sales revenue of 10.7 billion forints and the estimated value of the company’s profit before taxation adds up to 811 million forints. The profit achieved exceeds the value that was earlier estimated by the company. This fact deserves attention because Zwack Unicum Rt. closed its first quarter with an expressedly weak performance. Based on the profit of 811 million forints it is probable that the company will be able to pay out the dividend of 750 forints a share as they always used to. On other hand the company convened an extraordinary general meeting for September 21. the main item on the agenda is the alteration of the business year, because the company will change over to it’s main owner’s Peter Zwack and Consorten AG’s calculation period. As a result of this the business year will start by the first day of April and ends by the date March 31. Owing to this alteration after Egis, Zwack will be the second company listed on the Hungarian stock exchange whose business year period will vary from the usual starting and ending dates in January and December. (NG p11, p12)

TRADE, FAIRS, CAR - 27.07.2004 Car dealers to decrease diesel car prices through tax modifications
The National Association of Car Dealers (Gépjármû-márkakereskedõk Országos Szövetsége) will work out a motion aimed at decreasing the price of diesel cars with an engine of less than 2,000 cubic centimetres through the modification of the registration tax. These vehicles consume 40 percent less petrol than their petrol-run peers. However, on the Hungarian market that is characteristic of a price sensitise approach, economical cars are more difficult to sell in view of enormous costs of developing them. Buyers of larger category cars are not that sensitive to prices, thus here diesel cars are gaining ground in a more obvious way. 60-70 percent of VW Passat and Audi A6 models are equipped with a diesel engine by dealer Porsche Hungária. The ratio of diesel cars out of circulated in Hungary is at 10 percent, whilst the corresponding figure in Western Europe stands at 40-50 percent. (VG, p 6)

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Summit Rt. changed its name
Summit Motors Hungary Rt. the exclusive importer of the brand Nissan changed its name to Nissan Magyarország Kereskedelmi (NMK) Rt. (Nissan Hungary Commercial Co.). In the same time Summit Autó Magyarország Szolgáltató Rt. (Summit Car Hungary Service Provider Co.) was founded as well, beside the strategic development this firm offers accounting, financial and other services to the subsidiaries belonging to the company group. NMK sold 4245 new Nissan vehicles last year, the company opened its new own showroom in Budaörs not long ago. The one billion forint investment was financed by the Japanese Sumitomo Corporation. The Labour Office of Pest County contributed to the building of the showroom with a subsidy of 28 million forints as a support for job creation. (NG p5)

TRADE, FAIRS - 28.07.2004 Smaller hypermarkets from Tesco
In addition to the unit in Százhalombatta, Tesco Global Áruházak Rt. (Teco Global Stores) builds smaller hypermarkets with 3000 square metres ground spaces in Kiskõrös and Kalocsa as well. The company operating 30 stores at the time being did not disclose how many mini hypermarkets they intend to erect in the future. They also did not give any information about the future of the so called comfort store chain of 27 units named Tesco S-Market. Observants suppose that by constructing small floor-space stores the company intends to enter into the market of supermarkets. Auchan Magyarország Kft. does not plan to build units with smaller ground-space, leaders of the French owned company say the averagely 10-12 thousand square metres hypermarkets did pay off in Hungary. Auchan’s latest unit that will be handed over in Savoya Park in South Buda (Southern region of the capital’s side Buda) will be the same size as well. The third player of the hypermarket market Cora also does not „think small”, however the floor-space of its unit in Szolnok handed over recently adds up to merely 8000 square metres, which is less than the size of their stores used to be. The aggregated floor-space of hypermarkets adds up to half of a million square metres, therof 250-260 thousand is possessed by Tesco. Auchan has 100 thousand square metres, followed by Cora with 70-75 thousand and the rest belongs to Spar. (NG p5)

TRADE, FAIRS, CAR - 28.07.2004 Audi TT will be manufactured in Gyõr in the future as well
Audi AG decided that the new TT models will be produced in Gyõr as from 2007 the latest – announced Joachim Cordshagen press-agent of the German car manufacturing company. The carrosserie of the new model will be made in Germany, the assembling and quality insurance related tasks will be carried out in Gyõr. There were altogether 280 thousand Audi TTs produced in Gyõr since 1998. Since the demand for these models is descending in the last time, the company has to launch a new model. (NG p1, p4, Nszab. p13, MH p9)

TRADE, FAIRS, CAR - 30.07.2004 Car importers are waiting
Car importers do not react to the strengthening of the HUF immediately. According to János Eppel, managing director of Porsche Hungaria primarily the degree of exchange rate changes determine, whether they amend their prices. The company will rather spend the foreign exchange profit potentially arising from the current strengthening that has been going on for a few days on compensating the price increase that occurred due to price harmonisation. Polar Mobil Kft. that pursues Hungarian and Czech Saab brand importer tasks as well has established its currently valid price list at an exchange rate of HUF 250/EUR. At least three weeks shall pass until the company starts calculations aiming price reduction due to HUF that is stronger than the current one. Mazda Motor Hungary Kft. (MMH) is also waiting. Tibor Együd, managing director, stated: at least one month shall pass before MMH changes sales prices. The current prices of Opel and Daewoo cars were established by GM Southeast Europe similarly to Polar Mobil, at an exchange rate of HUF 250/EUR. This will not change for the time being – said András Dános, communication director, and added: they did not effect the opportunity of price raise when the euro floated around the level of HUF 270. (NG p4)

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TRAFFIC, TRANSPORT - 29.07.2004 In search of a buyer for Malév
The government would sell Hungarian Airlines Malév this year - it was decided -among others- in yesterday’s cabinet session. Under the privatisation concept, a one-round, open tender process will take place for the state-held share package of 97 percent. Government spokesman Zoltán J. Gál stated that there was going to be an opportunity for consortia to enter the race with the only condition being that Malév’s status as a national carrier should be upheld. Besides the capital increase, the buyer would have to undertake paying back total debt of the airline, translating into the amount of HUF 36.2 billion. As for eventual buyers, Chinese Hainan Airlines, French-Dutch Air France-KLM and Austrian Airlines are mentioned. Experts are of the opinion that the Chinese company stands the best chances, since through acquiring Malév, they could enter the European market as well. (NSZ, p 3, Nszab,p 1 and 6, MH, p 1 and 9)

Union driving licence from August
Starting form August, the Union driving licence of a unified format will be introduced in Hungary, too. The new document will have some formal deviations from the plastic one that was introduced back in 2001, such as the Union flag and texts in several languages. Driving licences issued earlier will not lose their validity and could be used in every member state of the Union. (Nszab, p 1 and 19)

TRAFFIC, TRANSPORT - 30.07.2004 Air tickets from the Internet
The sooner the passenger reserves the air ticket on the Internet, the lower the price will be – reveals the review of Népszabadság. The paper compares the online offers of British Airways, EasyJet, Malév, SkyEurope and Wizz Air. These airlines operate electronic offices, where not only reservation but purchase and payment are also possible. The service offered by Air France is considered outdated today: on the Hungarian homepage only a form can be filled and the firm offers to call back or reply via email. (Nszab. p15)

Malév high in the sky
Malév’s (Hungarian Airline) performance was above expectations in the first part of the year – announced László Sándor. The chief executive officer said: online booking brought a sales revenue of 500 million forints since its start in December, which adds up to 15 percent of the whole Hungarian turnover. After last year’s loss of 13 billion forints the management expects to reach the break even point or even a minor profit. The company fulfilled 3 billion forints of the operating income of 6 billion forints planned for this year. The company’s sales revenue improved by 15 percent to 39 billion forints and the number of air-passengers increased by 24 percent between January and June. Concerning the airway’s privatisation László Sándor highlighted: to preserve to company’s national image is important because this is the only way to preserve the rights of flights to destinations outside Europe. To achieve this goal at least the half of the shares plus one vote must be in Hungarian ownership. (NSZ p5, Nszab. p15, MH p11)

TOURISM, HOSPITALITY - 27.07.2004 Subway opened its first outlet in Budapest
American sandwich restaurant chain Subway has recently opened its first Hungarian outlet in secrecy. The sandwich bar is in Károly Boulevard in Budapest. As for reasons of not giving information on the opening of the first outlet, which took an investment of USD 130,000- 200,000 to complete, Subway’s representative in Hungary and General Manager of Székelyföld Kereskedelmi és Szolgáltató Kft. John D. Holms cited safety reasons. The ceremony was attended by the American ambassador to Budapest, too. Subway plans to open another outlet in Budapest this year, followed by one in Szeged. There is no final decision as for the pace of expansion. Plans call for the opening of 50 sandwich bars in the next seven years, mainly near railway stations, hospitals and military bases. Subway is in talks with franchise partners and would like to increase the number of its Hungarian suppliers. At present, a large part of raw material is coming from abroad. (VG, p 7)

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INVESTMENT, DEVELOPMENT - 26.07.2004 Diageo to expand in Budapest
Diageo moves administration departments to Hungary. The Scottish beverage whole saler company intends to quit 60 jobs in Scotland, the lay-off will start in August. The number of employees in the European business servicing centre located in Budapest will increase from 270 to 400 people. (VG p8, NG p5)

Eight billion forints investment in the industrial park of Pápa
In the framework of an investment of 8 billion forints (32.5 million euros) Európai Divat Szolgáltató Kft. (European Fashion Service Provider Ltd.) held by American, Israeli and German owners builds a manufacturing plant, logistics base, hotel and filling station on the land of 16 hectares purchased in the industrial park of Pápa. The project will be launched in September and the manufacturing plant with a ground space of 30 thousand square metres, the 30 rooms hotel and the filling station will be completed by the end of 2005. There will be textile industrial activities done exclusively for export in the plant. The base in Pápa will work as a logistics and entrepôt centre as well. (NSZ, p5, MH, p9)

Getronics moves its centre office to Hungary
Getronics will establish its European service provider office in Hungary - learned Napi Gazdaság (Daily Economy journal). The Dutch network- and system integrator company – according to its plans – will employ 50 engineers in the beginning, but they will increase this number up to 200 in a year. The centre will be launched in October. The company is searching for the appropriate office building and started to recruit stuff. (NG p1, p4)

Tesco to erect hypermarket in Komárom
Tesco builds a hypermarket in Komárom. The company undertook to rebuild Igmándi street between Erzsébet bridge and the city centre, furthermore lays decoration pavement in the stores parking lot and footways. This increases the investment costs of the 5 thousand square metres store to 2.7 billion forints. (NG p14)

INVESTMENT, DEVELOPMENT, REAL ESTATE - 26.07.2004 Budaörs to sell HUF 1 billion plot
The self-government of Budaörs invites bids for an area of 15 hectares in its ownership in a one round open tender. The minimal price of the real estate without utilities in the plateau of Kamaraerdõ-Tétény is HUF 1 billion. 25-30 percent of the giant plot can be built on. Bids are expected till 3 September. (MH, p 4, NG, p 14)

INVESTMENT, DEVELOPMENT, REAL ESTATE - 27.07.2004 Plaza Centers selling shopping centres
Due to selling its shopping centres Plaza Centers Kft. merges its 14 plaza companies into 7 enterprises. The company entered into an agreement with Klepierre group owned by BNP Paribas about selling 12 plaza buildings. The buyer pays 285 million euros for the projects. Later on additional plaza buildings will be sold expectedly. According to plans Plaza Centers will keep the shopping centres located in Pécs, Szombathely, Sopron and Veszprém only. (NG p4)

INVESTMENT, DEVELOPMENT - 28.07.2004 BorgWarner to build additional plant
Short after handing over its second manufacturing plant, the ground space of which adds up to 6 thousand square metres BorgWarner Turbo System Kft., the parent company decided to construct an additional plant. Together with this third stage where the factory’s ground space will be 9 thousand square metres the manufacturing basis located in Oroszlány will be the American parent company’s second biggest unit. The work employs 250 people at the time being. The company delivers turbo-compressors among other client to Audi, Volkswagen and General Motors. (NG p5)

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Program to lure capital for investors
This year will see around EUR 3.9 billion working capital coming to the Hungarian economy, EUR 500 million more than last year. Better figures can be attributed to Hungary’s accession to the European Union and also to the investment program that runs till then end of 2006 and is based on single judgement. The essence of it is that investments exceeding EUR 50 million and in case of service centres, above EUR 25 million are taken out of the normal application system by the government and funds are given after a single judgement process. Investors can count on EUR 30 billion in funds this year. Eight international companies will get state funds this way and negotiations are going on with another 20 on further investments. Daily Népszava (People’s Voice daily journal) mentions Bosch, ExxonMobil, Denso, Electrolux, German Sol@Mio and GlaxoSmithKline among those granted funds. (NSZ, p 5)

GE to enlarge its base in Nagykanizsa?
General Electric Hungary Rt. intends to expand further its logistics base handed over last year, the project was implemented in the framework of a 4 million dollars investment. The competent representative of the municipality did not contradict the information but said: Merkantil Ingatlanlízing Rt. (Merkantil Real Estate Leasing Co.) that carried out GE’s real estate development handed over last year recently submitted a bid related to the plot of 10 thousand square metres owned by the municipality. The plot is located next to the site where the GE centre can be found. According the company’s plan the parties will soon agree in the terms of about the buying and selling, as a result of this the expansion of the logistics centre can soon take place. The value of the investment will add up to several billion forints. (NG p1, p4)

INVESTMENT, DEVELOPMENT - 30.07.2004 ACG preparing for a development of sixty million euros
The Japanese Asahi Glass Corp. engaged in car spare part manufacturing will start a 60 million euor investment in the industrial park of Tatabánya. Concerned parties signed the agreement about this this week. The investment will start this autumn, trial manufacturing can commence next year and production in 2006 – reveals the annex of Napi Gazdaság that introduces Tatabánya. The compilation publishing the interview that was prepared with the city’s mayor deals with the plans of the Finnish Raflatax that operates in the city’s industrial park, the city’s rehabilitation programme, local training, the construction of the Panoráma residential park and efforts aiming the development of the social and health care supply system. (NG pI-IV)

SECURITIES’ MARKETS - 26.07.2004 Bourse is in for a nice future - Flash reports to come out
Analysts are of the opinion that the benchmark BUX index of the Budapest Stock Exchange is to see further increases this year. Movements will be determined by blue chips with changes in the base interest rate also likely to have an effect, together with American presidential elections and accelerating economic growth. Experts are of the opinion that BUX may reach at least 11,000 points by the end of the year with the maximum set at 13,000 points. In international comparison, BUX has fared very well in the first half of the year, its 24.3 percent increase, calculated in dollar terms, lags behind only the Ukrainian, Romanian and Icelandic bourses in Europe. Largest profits could be realised with shares of two banks: Land Mortgage and Credit Bank FHB saw a 105.9 percent increase in its values till the end of June, whilst National Savings Bank OTP had a corresponding figure of 59.78 percent. Oil and gas distributor Mol Rt. also proved to be a successful investment at 30.80 percent with broadcasting company Antenna 30.43 percent more expensive. Out of shares of the category „A”, former Mezõgép, currently named Linamar, dealing with machine manufacturing, lost the most at 29.82 percent, followed by busmaker NABI (27.12 percent), food retailer Globus (23.15 percent) and drug manufacturer Richter (13.91 percent). Daily Népszava carries a table on the yields of public companies in the category „A”. In a similar development, today will see the start of the half-yearly flash report season at BSE with figures of Inter-Európa Bank published first. (VG, p 9, NSZ, p 5)

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MUNICIPALITY - 26.07.2004 Suzuki forced to pay fine
The self-government of Esztergom has made Magyar Suzuki Rt. to pay HUF 786 million in fines, because the car manufacturer has started building its new production hall without the necessary licences. Since then, the company had asked and been given permission to carry on construction, however, there is a law regulating that a fine should be levied in cases like this. Magyar Suzuki has appealed against the ruling. (NSZ, 24 July, p 5, Nszab, 24 July, p 15, MH, 24-25 July, p 12, VG, 26 July, p 7)

MEDIA - 26.07.2004 Satellite televisions channels emigrating
As of July, television channel Minimax will broadcast its programmes with a Czech licence. According to executives of the children channel, Hungary has by far the most expensive satellite broadcasting, several tens of millions of forints, whilst in Prague they will have to pay around HUF 300,000 only. The program will be transmitted via satellite in the future, too and will be distributed by cable televisions, thus viewers will not feel anything of changes. Viasat is also considering relocation. General Manager Attila Kocsis is of the opinion that reasons lie in the practise of the media institution levying fines and several restrictive aspects of the media law. Viasat has recently started theme channels focussing on nature and history, but they were registered not in Budapest, but in London. Channels m+ and f+ , started with the help of RTL Klub last year were registered in neighbouring Romania. In a related development, owner of other commercial channel tv2 will broadcast its new program, aimed at drawing the attention of housewomen, from Amsterdam. Chairman of Hungarian media watchdog ORTT told daily Népszabadság that the satellite broadcasting fee would be reconsidered in autumn. (Nszab, 24 July, p 1)

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