June 9th, 2009
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Markets hold breath as analysts see Bajnai staying in power, continuing reforms

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Hungary’s political parties, with the “somewhat worrying” exception of the radical party Jobbik, performed as expected in Sunday’s European Parliamentary election, and the most likely outcome is that the government of Gordon Bajnai will stay in place, London-based financial analysts told MTI on Monday.

The analysts added that no significant signs had emerged on the market of a sell-off of Hungarian assets.

Juliet Sampson, an economist with HSBC, said that the result of the EP election in Hungary was unlikely to have an impact on the market since it was basically in line with expectations and in any case the EP election “does not mean too much” for the Hungarian economy.

Raffaella Tenconi, a senior economist with Wood Co, said that Prime Minister Gordon Bajnai’s crisis-management administration — a key factor in maintaining forint stability — was expected to remain in office until the next scheduled parliamentary elections in spring 2010.

Analyst for Hungary’s AXA Daniel Orosz told MTI that the forint did not show a tangible reaction to the European election results, it moved between a range of 286 and 288 against the euro in the afternoon. Orosz said that the rise of right-wing parties was experienced across Europe, so the foreign press will not view Hungary’s election results as too different from other countries and markets are not expected to react.

Traders reported markets holding their breath on Monday’s trading day and assessing the election outcome and its possible economic impact.

Orosz said that early elections in Hungary would increase uncertainty in the country and investors would start pricing in a higher risk factor as a result.

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  1. Expat Hun says:
    June 9, 2009 at 5:55 pm

    I left Hungary in the late 1960s, at that time Hungary was also in the middle of various “economic reforms,” called “New Economic Mechanism” os some such crap. Fast forward to the year 2009 – it is the same damned thing all over again. Raising taxes and calling them ‘reforms.’ The players’ names have changed, but the kaka smell lingers on.

    At least back in the 1960s and 70s, people from the so-called West had more brain than to move to Hungary and live there voluntarily. It was only the other way around.