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August 12, 2006
Investors' Dilemma in Hungary
For a long time, investors have been ignoring Hungary's fiscal recklessness. However, now they have turned the screw on the country. Recently, the investors have taken some tough decisions that would inflict heavy punishment on the country's equities, bond and currency markets. In the past six weeks, the Hungarian stock market fell by nearly 30 percent. At the same time, the Hungarian currency, forint lost more than 12 percent against the euro.
The government will submit a new euro convergence plan to the European Union and the European Central Bank. That might help the investors in getting a clear direction. Investors seek further direction from the United States, as most hedge fund operations are regulated by the US Federal Reserve.
Even though foreign investors struggled because of a deficit, they managed to triple their holdings in the government debt. They also increased their ownership on the booming Budapest Stock Exchange. There have been mixed signs over the investment prospects in Hungary. However, the current trend indicates that the investment market in that country will grow further.
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