- 6 May 2010 3:00 AM
The contributors to our poll were the following: Aberdeen, Allianz, Buda-Cash, CIB, Citadella Consulting, Concorde, Dialóg, Erste, Equilor, ING, K&H, MKB, OTP, QUAESTOR, Raiffeisen.
Portfolio.hu surveys fund managers at the beginning of every month to see where they expect the forint and the MAX index in 3 and in 12 months. The reference is always the closing value of the preceding month, this time EUR/HUF 269. We need to highlight, though that the forint closed at 276 to the euro on Tuesday and is currently quoted at above 278 on the interbank market.
Greece’s debt woes have not left the forint market unfazed in April, with the Hungarian currency easing by 1.3% against the euro. It has closed Tuesday’s session at 276 and weakened further today. The fund managers polled regularly by Portfolio.hu do not believe the pressure on the HUF will let up any time soon and do not forecast marked forint strengthening even from 276.
Half of the 16 respondents project EUR/HUF to be 2-5% weaker three months from the end-April reference value (269), and only 6% of them expect HUF appreciation, with the rest forecasting largely no change in the exchange rate. Note, however, that last month more of the fund managers saw the HUF at 2-5% weaker levels on a 3-m horizon than presently.
Nearly 70% of the respondents expect the HUF to be 2% weaker than the reference value 12 months from now, which means that the majority do not project the forint to be much stronger even compared to the current 276 level on this longer horizon.
Once we "distil" all the estimates into a single indicator we’ll find that such pessimism about the forint’s outlook last occurred in 2006.
Hungarian government security yields dropped further in April, hence it is no wonder the fund managers have scaled back their optimism regarding the prospects of the instruments. Already 33% of those polled expect the MAX index to be lower than the reference value three months from now (i.e. they project yields to rise). The ratio has not been this high since Portfolio.hu launched this poll in the spring of 2005.
Regarding the 12-m outlook, the respondents continue to expect yields to decline, but they project a smaller drop than a month ago. What we could experience lately is that as yields have dropped (and the MAX index has risen), the fund managers have started to tune down their expectations more and more.
In view of all this, it is no wonder none of the fund managers would be 'overweight’ on HGBs compared to their own benchmark (i.e. the reference index set in their investment policy). The majority (54%) suggest holding Hungarian debt at market weight, while 46% of them propose being 'underweight’ due to the limited yield drop potential."