Budapest Stock Exchange.

On Day 3 we went to see a presentation by Richard Vegh who is the director of the Budapest stock exchange. One of the main things that we discussed was how the exchange evolved as a young market economy and how the stock exchange is fairing today during the global financial crisis. For Hungary's GDP the two most important influences over their economy are there production in oil, gas, chemicals and pharmaceuticals. In 2008 their GDP was 155 billion in USD and in 2009 their GDP was 129 billion in USD which could have been worse but is not as bad as many other countries in CEE. Their gross public debt is at 81% which should be at 60% and unemployment is 10.5%. External trade is 5,900 billion in USD. The Hungarian central bank raised the base rate 300 basis points which set it to 5.25% to combat the financial crisis. The Hungarian market economy is newly developed in how they have just recently become a free market economy in 1990. The size of the private and public sector in 1990 was the state sector consisting of 85% control and the private sector conisisting of 15% control. In 2006 there was an oppositie shift of the state consisting of 20% and the private sector holding 80% of the control.

2005 was a big year for the stock exchange in Budapest when they had the merger of the Budapest stock exchange and the Budapest economy exchange making the gross net of the stock exchange that much bigger. The role of the stock exchange for businesses is raising captial for businesses, mobilizing savings for investment, facilitating company growth, balance risk and profit sharing, have corporate governance, creating investment opportunities for small investors and using the stock exchange as a barometer for the economy. Some other roles of the Budapest stock exchange are using it as a tool to know when and how to privatize the economy. Hungarian individuals were compensated for the soviet rule where their private assets were nationalized. They had the opportunity to buy their assets back from 60 years ago under the communist rule to move forward in privatization. Foreign Domestic Investment was crucial in this process in Hungary. This was not a smooth process but rather a peaceful transition. FDI was the biggest force in the transition.

The exchange rate in the economy is also another key factor to keep up with in terms of discussing the Budapest stock exchange. There is multiple exchanges in currency between multinational companies, large Hungarian companies, state owned companies, companies founded after the transformation from a public to private sector and finally between the newly developed banking system. They have a newly developed trading model consisting of a mutual trading fund with new competitors to their traditional exchanges. Some other topics we briefly discussed were the local market, the Central Eastern European stock exchange and the market capitalization of European exchanges.

In the product portfolio for the Budapest stock exchange biggest most important factor to consider is their equities exchange rate that trades 100 million euro per day with 46 different companies. Our speaker showed us bid and ask prices that were currently changing during the day and detailing how this is all electronic which is a big step for Hungary. Some of the topics we discussed in terms of the management of the finacial crisis were how there is a new tax law reduction of the borders of labor, 13 month compensation in the public sector and a pension hike that was canceled. Something extremely shocking is how 73.83% of their stock is owned by foreign investors. The increase of the number of securities was 22% from April 2008 to April 2009. Only 5.3% of households own stock. General ownership is remarkably less.