Hungary’s financial market regulator PSzÁF suspended trade in property fund units because of a sharp drop in some funds’ liquidity and to prevent a wave of withdrawals from the funds, the Association of Hungarian Investment Fund and Asset Management Companies (BAMOSZ) said on Monday.
PSzÁF on Friday announced it suspended all trade in units of open-ended property funds for ten days to allow investment fund managers time to inform investors of the prospects regarding prices and risks.
Investors have made big withdrawals from property funds in the past weeks because of the poor outlook for the property market and more attractive government securities yields and bank deposit rates, causing the liquidity of the funds -- at 40-50%, well over the legal requirement and high in international comparison -- to fall significantly, BAMOSZ said.
PSzÁF may suspend trade in investment fund units if the funds’ liquidity falls under the stipulated level and keep the suspension in place until liquidity meets the requirement. Investments in property funds should be seen as mid- and long-term investments, BAMOSZ said.
In a statement published on Monday, Erste Bank said it considered the suspension unnecessary regarding its own property funds. Erste Bank will offer loans to clients who wish to withdraw from the property funds during the suspension, if necessary, using the units themselves as collateral, the bank said. (MTI-Eco)