Put Forint Savings Into Euros? Not A Good Idea

The results of Portfolio.hu's fund manager survey, with 18 participants, show that the majority of pro investors consider Hungarian government bonds as a good, but not outstanding investment opportunity.

Following the yield erosions in the past two months, the FI market investors' enthusiasm has abated and an increasing number of them expect the market to switch into sideway mode, Portfolio.hu's September survey showed on Thursday.

For the next three months, 61% of the 18 respondents projected the MAX index to show no bigger than +/-2% shifts compared to the 31 August reference value. There was no one in the survey that forecasted a decline in the index, but there were fewer fund managers in the current poll than a month ago who expect a larger rise, which may be attributable to elevating political risks on the domestic front. 

These risks, however, have apparently not affected the fund managers' outlook on the next 12 months. The distribution of different projections was largely the same as a month ago, with the majority still expecting a moderate increase in the index.

Looking at the weighting in the portfolios we can see that most of the fund managers consider HGBs a good but not an exceptional investment opportunity.

What will happen to the forint?

From peaks around EUR/HUF 230, Hungary's national currency eased close to 240, a level most portfolio managers active on the local market seem to be satisfied with, as 72% of the respondents project EUR/HUF to stagnate there during the next three months. Interestingly enough, even the current political uncertainties have not prompted them to project marked moves in the exchange rate. 

The respondents do not expect major HUF depreciation even in the next 12 months, with 44% of them still seeing a 2-5% firming ahead. This would mean EUR/HUF should be between 224.70 and 231.70 in August 2009."

Source: Portfolio Online Financial Journal