Budapest and Riga bourses outshine many rivals in a poor year for European stock markets.
Transitions Online 23 December 2015
The stock exchanges of Hungary, Latvia, and Slovakia have been delivering solid returns, outperforming many top European stock markets in 2015.
While the pan-European FTSE EuroFirst 300 index is up just 2.6 percent this year – its lowest gain since 2011 – investments in some Central and Eastern European bourses have fared far better, Reuters reports.
Latvia and Slovakia, along with Ireland, are among the euro zone's top performing stock markets in 2015.
The Budapest SE index is up over 40 percent in both euro and forint terms, benefiting from radical measures implemented by the government of Prime Minister Viktor Orban, including cutting bank taxes and slashing interest rates.
“The measures meant that, unlike other eastern European countries, Hungary was relatively well insulated from turmoil after Switzerland scrapped the cap on the Swiss franc in January. Most economists expect Hungary to return to investment grade next year,” according to Reuters.
Hungary’s central bank announced in November it would take control of the Budapest stock exchange after buying stakes from two big Austrian shareholders in a $45 million deal.
“Authorities in Budapest plan to use the unusual move to reinvigorate the market for domestic investors and issuers after several years of declining listings and turnover,” the Financial Times reported.
Latvia has been lauded for its reform efforts, Reuters said, and the main Riga index is also up over 40 percent this year.
Latvian stocks posted the biggest gains among global markets in the third quarter, “bucking the rout that sent emerging-market equities to their worst losses in four years,” Bloomberg reported. The rally was mainly due to an $80 million purchase of shares in national pipeline and terminal operator Ventspils Nafta.
Orban is seeking to regain Hungary’s investment-grade status, and his policies to cut Europe’s highest bank tax have improved its investment outlook, Bloomberg reported last month.
On 20 November Fitch Ratings kept Hungary at the highest junk rating, BB+, with a positive outlook, according to Bloomberg.
Among the OECD member countries, Slovakia and Korea are the only ones whose bourse operators haven't transformed into shareholding companies, The Korea Times says.
Hungary, Latvia Stocks Buck EU Trend