Even the Orbán-Trump friendship will not fix the Hungarian economy - investment manager

According to Brandywine's analysts, economic instability and political uncertainty remain major challenges in Eastern Europe. Portfolio manager William Vaughan highlighted that while inflation trends are improving, energy prices and weak currencies remain a concern.

For Hungary, the weakness of the forint and falling demand in the automotive sector are particularly aggravating the situation.

In his view, political uncertainties in the region are also having a significant impact on bond markets. Vaughan believes that elections in Romania and the Czech Republic, as well as Hungary's parliamentary campaign in 2026, could pose additional risks. Analysts at Brandywine say that

Viktor Orbán's US ties may be beneficial economically, but not enough to offset the impact of possible new anti-EU tariffs.

The fund manager does not currently consider buying Hungarian bonds to be a good deal. In addition to the weakness of the forint, the problems of the European automotive industry and low yields are keeping investors away. By contrast, higher-yielding markets in the Middle East and North Africa, such as Türkiye, Egypt and Israel, offer a more attractive alternative.

Analysts see US short-term bond yields of 6-7% as a major attraction, while risks in Eastern European markets continue to rise.

Israeli gas markets and investments towards Egypt offer more stable fundamentals, further reducing the competitiveness of the Hungarian market.

Although Brandywine remains cautious, the Hungarian Government Debt Management Agency (ÁKK) is optimistic. According to outgoing ÁKK CEO Zoltán Kurali, underweight foreign investors by the end of 2024 could lead to significant interest in 2025. Market stability and higher yields could be the factors that make Hungarian bonds attractive again.

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