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Investments high among venture capitalists, retail investors

In the first quarter of this year, venture capital investments worth a total of over HUF 1.34 billion were carried out in Hungary, according to data compiled by the Hungarian Private Equity and Venture Capital Association (HVCA). The most active industries were consumer services and transportation.

The report, prepared by the HVCA and EY, shows that in the first quarter of 2018, some 39 investment transactions were closed involving 39 companies, worth a total amount of HUF 1.347 bln. This is significantly higher than the HUF 710 million invested in Q1 2017, but lower than in Q1 2016, when a bumper HUF 3.85 bln was invested.

Transaction values varied between HUF 5 mln for a VC incubation to HUF 150 mln for a VC seed investment. The two largest sectors were consumer services and transportation, accounting for 45% of the total transaction value.

In addition, six funds reported a total of 12 divestments in the first quarter of this year in various sectors, with no specific concentration. This compares to 11 exits for the entire year 2017, noted state news wire MTI.

All of the investments were made by venture capital funds and no placements were made by private equity funds, added MTI.

Retail investment up, despite weak forint

Households also look optimistic, taking into consideration money invested in equities, shows a report by the National Bank of Hungary (MNB). In May, small investors registered significant losses on the Budapest Stock Exchange (BÉT) amounting to HUF 43.5 bln, due to the weakening of the Hungarian forint. Despite this, they also bought securities from their savings worth HUF 25.7 bln in May, a record amount of spending since August and September 2011, the MNB said, cited by business daily Világgazdaság.

Small investors showed even greater interest in government bonds, of which they purchased some HUF 64.7 bln in May. Moreover, to the delight of the Government Debt Management Agency (ÁKK), the overwhelming majority of this amount was invested in securities of more than one yearʼs maturity.

At the end of May, householdsʼ stock of government bonds exceeded HUF 5.2 trillion, some HUF 2.18 tln of which was in forint-denominated bonds of over one yearʼs maturity, a 38.5% increase year-on-year.

The stock of foreign currency-denominated bonds held by retail investors also leapt in May, up around HUF 10 bln to HUF 161.4 bln, partly due to purchases but also as a consequence of the weakening of the forint, noted Világgazdaság.

At the same time, the head of the ÁKK recently said that the agency plans no raise in the interest rates of government securities targeted at retail buyers.