Hungary's foreign investors cut their holdings in the country's assets in the fourth quarter last year, including government debt as well as stocks, according to a report published by the National Bank of Hungary (MNB) today.Foreign investors cut their Hungarian government securities holdings by Ft 43 billion in the quarter and held 27.7% of all state bonds and bills at the end of December, the smallest ratio in five quarters, the bank said. Their stock holdings fell by Ft 64.3 billion. Investors are selling Hungarian stocks and bonds amid mounting concern about the government's ability to control a bourgeoning budget deficit. Hungary must cut the shortfall in half by the end of 2008 to adopt the euro two years later. The uncertainty hurt short-term bonds the most, the bank said. “The most apparent shift on the market of government securities is the decline of non-resident assets,” the central bank said in its report. “It is most conspicuous that non-resident investors cut their holdings of short-term Treasury by two-thirds in the past two quarters.” Foreign holdings of Hungarian investment funds doubled to Ft 27.7 billion in the quarter.