Capital Markets Statement by Ronald Schneider, Head of Bonds, CEE & Global Emerging Markets

Hungarian equities, bonds and, in particular, the currency have performed strongly in the wake of the news and in anticipation of a more cooperative stance towards Europe. Whilst there was still considerable uncertainty before the election, the forint has recently staged an impressive rally and is currently one of the strongest currencies against the euro.

The end of Prime Minister Viktor Orbán’s 16-year rule is fuelling hopes in the markets that Hungary will now restore its strained relationship with Brussels. The more pro-European government certainly has a better chance of lifting the block on billions in outstanding EU funds. This involves around €18 billion across various programmes and, in particular, more than €6.4 billion in pandemic recovery funds. Hungary has lost out on growth in recent years due to the lack of EU funds and misguided economic policy priorities. With the prospect of these funds, there is now justified hope for stronger growth once again.

However, a prerequisite for the disbursement of the funds will be that Hungary meets the conditions regarding the rule of law and governance. Should Hungary receive the EU funds, this would not only help the budget deficit – which has been severely strained, not least in the wake of the FIDESZ party’s election victory – but would certainly improve Hungary’s medium-term growth prospects. The budget deficit stood at 4.6% in 2025. Inflationary pressure exists, but is not excessively high. Speculation that Hungary might now adopt the euro is also growing louder.

Investments in securities involve higher risks. Raiffeisen Capital Management stands for Raiffeisen KAG. This is a marketing notice.