Coronavirus hits Hungarian investment market hard in March

Main savings categories all shrink

As for the funds Hungarian households were keeping in various forms of savings, the National Bank of Hungary’s (MNB) statistics released on Monday show that:

• the stock of government securities dropped by 0.36%,
• funds managed by investment funds decreased by nearly 7%,
• while savings kept in shares dropped by nearly 17%.

The MNB will release statistics on bank deposits separately on Wednesday.

Meanwhile, financial institutions bought government securities for HUF 261 billion in March, a hundredfold increase from February’s paltry HUF 3 bn, after the central bank pumped extra liquidity into the banking system.

The data above show net changes including yields and net sales.

Net sales of retail government securities were negative in March for the first time since last May as households redeemed HUF 41 bn more securities than they bought.

Investment funds recorded HUF 140 bn negative net sales in March as many decided to withdraw funds in these turbulent times.

Investment funds had a rough March as negative net sales and market losses decreased assets managed by HUF 456 bn, HUF 260 bn of which could be attributed to households.

There was virtually no category left unaffected by the coronavirus crisis in March, with household assets managed by bond, share, mixed, capital protected and property funds all reporting a decrease.

Shares were the only form of investment to attract significant funds in March, with households investing a net HUF 20 bn as the uncertainty in markets prompted Hungarians to invest in a falling stock market. Nevertheless, the stock of shares decreased in March as prices continued to fall.

Nearly all retail securities held by households

Portfolio has been tracking the ownership structure of retail government securities for some time, and we now appear to near the point when all retail securities are actually held by households.

According to the latest data from the Government Debt Management Centre (ÁKK), the total stock of retail government securities in the market is HUF 9,279 bn, of which households own HUF 8,369 bn according to the central bank.

This means the amount of retail government securities not held by households is now less than HUF 1,000 bn.

The closing of the gap is partly due to the ÁKK narrowing the circle of eligible customers over the years, but also because the debt manager began actively repurchasing retail securities from distributors.

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