© The Financial Times Ltd 2016 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
In a year when consumers were confronted by fears of another recession and retirement pots were undermined by plunging stockmarkets, Volkswagen’s ability to sell 8m vehicles is impressive by any measure.
A substantial chunk of its 14 per cent sales increase last year came, of course, from China, where sales rose by 17 per cent to 2.25m units. But as chief executive Martin Winterkorn glanced over the figures at the Detroit motor show, he will not have failed to notice the perfomance of a market where the German carmaker has traditionally struggled: India. Read more
Wen’s subsequent appointments in the UK and Germany will doubtless attract more attention from the world’s media, given the eurozone’s present woes. Read more
In credit rating terms, Hungary has been standing in the naughty corner for the past six months. One false move and recalcitrant Budapest faced the credit-equivalent of being turfed out of the school classroom, by having its debt downgraded to junk status.
Monday’s decision by Fitch to revise its outlook on Hungary’s debt from “negative” to “stable” is the first tacit recognition by one of the three big rating agencies that Hungary has at last started doing its homework. Read more
Hungary’s central bank kept interest rates on hold at 6 per cent on Monday, as analysts had uniformly predicted.
The decision reinforces the more settled outlook surrounding Hungarian assets which emerging market investors have viewed in a much more positive light of late. Read more
Romania endured some of the continent’s toughest austerity measures last year. (Any public sectors workers in western Europe fancy a 25 per cent pay cut? No? Thought not.) So Romanians can give themselves a collective pat on the back. Read more
Moody’s Investors Service downgraded the ratings of seven Hungarian banks on Tuesday reminding investors that the country’s economic problems will not be solved overnight
The rating agency’s intervention came as something of a surprise, given the sunny tone of financial news wafting from Hungary of late and a sharp rebound in Budapest’s markets. Read more
Analysts had given the chance of a rate cut short shrift after all four new members of the seven-member monetary policy committee made market-friendly noises about guarding against inflation during their recent nomination hearings. In any case one of the new members did not attend Monday’s meeting. Read more
What on earth is going on at Emfesz? Hungary’s largest independent gas distributor is embroiled in a bitter ownership dispute; a Swedish court has ordered it to hand over more than $500m for allegedly unpaid-for gas; and its customers base is disappearing like leaking gas.
Can the company hold out? Not a problem, it says. Just a matter of “finding its place among the new circumstances”. Read more
Next month marks the first anniversary of prime minister Viktor Orban’s thumping election victory – an event that radically transformed the political and investment climate in Hungary.
In a defiant address on Tuesday, Orban boasted he had resisted “diktats” from Brussels and had stood up for Hungary against an array of other malignant forces, among them the IMF, banks, stock exchange sharks and foreign critics.
But in the unorthodox political tennis match between Orban on one side and government critics, foreign investors, the European Commission and European Central Bank on the other, who is really winning? Read more
Instead of appointing four new members to the seven-member committee, only two new rate-setters were announced – both of whom are economists and former central bank employees. Moreover, their immediate comments betrayed few signs of an impending radical departure in monetary policy, leaving Hungarian assets broadly unchanged. Read more
As beyondbrics can reveal, Hungary has appointed Financial Dynamics, a London financial PR firm, to help restore its battered public image and persuade the investment community that economic policy is on the right track.
Presumably ministers have taken full account of FD’s experience in advising the crisis-hit governments of Greece and Iceland as well as debt-laden Dubai World – although it’s unlikely either FD or Budapest would wish you to dwell on the comparison. Read more
Investors have been waiting months for the Hungarian government to announce its fiscal reform package. But when the day finally came it was rather a damp squib.
The headline figures announced by economy minister Gyorgy Matolcsy and deputy prime minister Tibor Navracsis on Tuesday were broadly in line with expectations. Even still, Hungary’s Budapest SE, the main stock exchange, fell 1.9 per cent from an opening price of 23,308.07. It was down 1 per cent at 22,873.91 in afternoon trading. Read more
Hungary’s central bank kept interest rates on hold at 6 per cent on Monday, ending a recent tightening cycle.
The decision was no surprise given January’s favourable inflation numbers and a recent contraction in Hungary’s CDS spreads (a measure of risk assessment). As with mastering the Hungarian language, however, the situation is far from straightforward. Read more
They may not be surprised but investors will certainly feel a degree of relief that Romania has decided to seek a new €5bn precautionary loan with the International Monetary Fund and European Union.
Perhaps wisely, Bucharest has chosen not to follow the example of neighbouring Hungary which decided last summer that it could do without the advice of this roving band of fiscal policy wonks. Read more
China’s Wanhua Industrial Group has completed its takeover of Hungary’s Borsodchem – an intra-emerging market marriage that creates the world’s third largest isocyanate manufacturer.
The chemistry of isocyanates (raw materials used to make foams for the automotive, construction and furniture industries, since you ask) are perhaps of less interest to most readers than a prediction by Wanhua’s chief executive that the €1.2bn deal could be the first of many by Chinese companies in the region. Read more
The Bucharest Stock Exchange hopes that the recent listing of one of central and eastern Europe’s largest property restitution funds could mark the start of renewed interest from foreign investors in Romania after a challenging period for the local capital market.
Both the total value and liquidity of shares traded on the Bucharest market suffered precipitous falls during the economic crisis as investors lost confidence in frontier markets such as Romania. Read more
Fondul Proprietatea’s shares rose after listing on the Bucharest Stock Exchange amid high hopes that one of eastern Europe’s largest property restitution funds will draw new foreign institutional investors to cash-strapped Romania.
Shares in the €3.6bn fund which holds stakes in 83 companies – most of them unlisted and weighted heavily towards the energy sector – traded at 0.62 lei, well above the previous over-the-counter price of about 0.5 lei. Read more
Hungary’s central bank has raised interest rates for a third month in succession, a move most analysts had anticipated.
Following Poland’s rate hike last week, the casual observer might assume that the Magyar Nemzeti Bank’s decision to lift the base rate by 25 basis points to 6 per cent reflects similar concerns about rising inflation in central Europe. Read more
There were few Chinese among the delegates at this week’s packed central and eastern Europe investor conference in Vienna but Sino investment was much in mind a panellists debated the future of the region’s capital flows.
Emerging Europe is likely to remain reliant on capital inflows to support economic growth for some time to come as domestic savings –though increasing — are comparatively weak. Some see China as a potential source but investors in Vienna also recalled some troubling lessons from the region’s recent past. Read more