Hungarian assets, such as shares listed on the Budapest Stock Exchange and the forint national currency, are declining after Prime Minister Viktor Orban unveiled plans for an extended set of new taxes to support the economy.
The proposal is the latest in a series of measures that have alarmed investors as Hungary moves further and further away from the European Union and its NATO allies, writes Bloomberg.
Orban began his fourth consecutive term of office this week by declaring a state of emergency, immediately after imposing a constitutional amendment allowing the government to rule by decree in situations such as the war in neighboring Ukraine.
Energy company Mol Nyrt, which saw its profit rise from Russian crude oil sales, fell by up to 15% at the start of the trading session, while OTP Bank Nyrt, Hungary’s largest bank, fell at one point given by 13%. The forint has approached a record low against the euro. At the time of writing, MOL shares are minus 10% and OTP’s shares are minus 5%. The BUX index decreases by 4.2%, according to businessmagazin.ro.
Shares and Hungarian forint are falling sharply after Viktor Orban comes up with a set of new financial measures
In a video message sent out on Wednesday night, Orban said that this year and next year he aims to supplement the budget with “most” of what he called “additional profits” in sectors such as banking, insurance, energy. , telecommunications, department stores and airlines. This amount would finance the reduction of utility prices and help modernize the armed forces.
“This is very bad news for investors not only for Hungary but also for the whole region,” said Michal Konarski, an analyst at MBank SA in Warsaw. “Actions in this operational environment cannot be properly assessed, as earnings per share are almost unpredictable.”
Hungary could also plan to hit MOL with a tax on Russian crude oil imports, according to Tamas Pletser, a stock analyst at Erste Group Bank AG in Vienna. Such a move could help Orban politically, who is isolated in the EU because he did not support the bloc’s ban on buying Russian oil.
The forint was down 1% against the euro before recovering most of its losses and trading 0.1% weaker at 393.08 at 11:05 in Budapest. Hungary’s 10-year local currency government bond yield rose 21 basis points to 7.05%, the highest level in the last week.
Orban, the EU’s longest-serving head of government, has clashed with the bloc on issues ranging from Russia to immigration and the rule of law.
Follow România Libera on Twitter, Facebook and Google News!