Foreign investors were net sellers of HUF 357bn (EUR 1.3bn) of Hungarian securities in the second quarter, about half of their net purchases in the first quarter, as the Greek debt crisis and uncertainties about the economic policies of Hungary's new government weighed, the National Bank of Hungary's (NBH) quarterly report on securities ownership structure published on Monday shows.
The market value of foreign investors' holdings of Hungarian securities fell almost HUF 500bn in Q2 as share and bond prices dropped but the weaker forint raised the value of foreign currency-denominated government securities.
Foreign investors held HUF 13,956bn (EUR 50.3bn) of securities issued by Hungarian entities at the end of June, including HUF 5,012bn of foreign bond issues by the state. Debt-type securities made up 70pc of foreign investors' portfolio of Hungarian securities. Their holdings gave them almost 40pc of the total of these instruments, slightly more than three months earlier.
Foreigners made net withdrawals from all types of Hungarian securities, with the exception of corporate bonds and investment fund units, in Q2. In the previous quarter, they made net purchases of HUF 777bn, raising their holdings in all but the mortgage bond segment.
Foreign investors sold HUF 104bn of Hungarian shares and suffered a HUF 683bn loss on price changes in Q2. In the previous quarter, they made net purchases of HUF 28bn and enjoyed price gains of HUF 628bn. Almost 90pc of the shares sold by foreign investors in Q1 were purchased by households, although non-financial companies, banks and insurers were also net buyers.
With a market value of HUF 4,063bn, listed shares made up 29.1pc of foreign investors' Hungarian securities portfolio at the end of June. Their share of the market fell to 72.7pc from 74.5pc three months earlier. Total market capitalisation of the Budapest Stock Exchange fell HUF 922bn in Q2 to HUF 5,588bn at the end of June, almost entirely because of the drop in share prices.
In Q2, foreign investors sold HUF 100bn of forint government bonds but the market value of their holdings fell more: by HUF 175bn because of declining bond prices to HUF 8,412bn at the end of June. Their market share fell to 23.6pc from 24.9pc three month earlier. Net issues raised the entire stock of government bonds by HUF 25bn but price drops cut it by HUF 240bn during the period. Foreign investors held 14pc of their Hungarian securities investments in forint government bonds at the end of June.
Foreigners sold HUF 63bn worth of Hungarian government bonds issued abroad in Q2, but the market value of their portfolio still rose HUF 461bn as the forint weakened. In the absence of new foreign issues or major expiries, their market share fell just one percentage point to 96.8pc. They took up a USD 2bn bond issued by the state in January. About 36pc of their Hungarian securities investments was in foreign currency bonds issued by the Hungarian state.
Foreign investors sold net HUF 92bn of Hungarian T-bills in Q2, about three times their net purchases in Q1. Their holdings fell to HUF 58bn at market value, giving them a 3.2pc share of all T-bills.
Foreign investors' withdrew HUF 150bn from the central bank's two-week NBH zero-coupon bonds, the central bank's main liquidity instrument, in Q2. Holding HUF 222bn of the bonds at the end of the period, their market share fell to 6pc from 9pc three months earlier. They were net buyers of HUF 338bn of the bonds in Q1 after being net sellers in the previous quarter. The total stock of the bonds was HUF 3,569bn at the end of June, down HUF 554bn from three months earlier.
Foreign investors held 33.8pc of the total stock of mortgage-backed bonds of Hungarian issuers at the end of March, slightly up from 33.2pc three months earlier. Foreign investors' holdings on this market rose HUF 10bn, in spite of HUF 9bn in sales, because of revaluation gains, to HUF 678bn. The market value of overall stock of mortgage-backed bonds fell HUF 5bn. Net buyers during the period included the central bank, which launched a bond purchase programme in the spring, and households.
Excluding government and NBH securities as well as mortgage bonds, foreign investors invested net HUF 177bn in other bonds issued by Hungarian entities. With an additional HUF 53bn in revaluation gains, probably on foreign currency-denominated bonds, and HUF 6bn in volume changes, the value of their holdings rose to HUF 1,771bn or 52.2pc of the market. The total market grew by HUF 374bn, including HUF 258bn in revaluation gains. The other bond holdings made up 12.7pc of foreign investors' Hungarian securities portfolio, up from 10.7pc at the end of March.
Foreign investors bought net HUF 2bn of Hungarian investment fund units. Their total holdings of units came to HUF 69bn, or a tiny fraction of the total portfolio. Hungarian investment funds sold HUF 164bn of units in Q2, mostly to households, bringing total stock to HUF 3,612bn, including the effect of a HUF 6bn prices loss. (MTI-Econews)