Domestic equity market at historic highs
The Budapest Stock Exchange closed at a historic high on April 13, the day after the elections. OTP shares ended the trading session 8.4 per cent higher, reaching a new absolute peak. Mol also closed close to 8 per cent in the green and stepped to an even higher level a few days later. The BUX index hit historic records twice in the week following the election, and with the exception of Magyar Telekom, all the domestic blue chips closed at new all-time levels — Magyar Telekom had already broken out at the end of February in a separate rally, when the share recorded a multi-percent jump on a single day.
The market, however, did not move in a single direction. The repricing is selective, and a few companies that had risen in recent years — particularly some operators in the domestic financial and holding segment — visibly underperformed the exchange average. Investors are reorganising their domestic monetary exposure and turning rather toward the large Hungarian companies with stable, internationally exposed activity. The "buy the dip" mentality has again become dominant, while in the background the global risks, the oil prices and the geopolitical tensions, have remained intact.
Second wind for the government bond market
The retail government bond market noticeably slowed in the weeks before the election. Due to uncertainty, purchases moved on a declining path for weeks, then in the first week after the election 59 billion forints in net sales appeared. The turn came suddenly. The structure of the weekly volume is characteristic. The Fixed Hungarian Government Bond accounted for 35.62 billion, the Hungarian Government Bond Plus for 13.14 billion and the Treasury Savings Bond for 7.96 billion forints in purchases, shifting the market toward fixed-rate constructions. From the start of the year, retail investors have purchased a total of around 1,392 billion forints in retail government bonds, averaging 87 billion forints in weekly turnover.
The supply side brought meaningful novelty in April. The new Hungarian Government Bond Plus series, the 2031/M2 bond maturing in 2031, launched at issuance with a 13-month first interest period, paying an effective coupon of 7.39 per cent for the entire first interval. Over the maturity the coupon rises year on year, from the opening 6.5 per cent to 7.5 per cent in the fifth year. The Premium Hungarian Government Bond, the currently subscribable 2032/J series, undergoes a coupon change starting on April 22. The inflation-tracking structure adds the customary 0.5 per cent interest premium to the 2025 average inflation rate of 3.7 per cent, giving a yield of 4.2 per cent for the new interest period. The retail portfolio still holds the largest stock, close to 4,300 billion forints, in the Fixed Hungarian Government Bond, around 3,200 billion forints in the Premium Hungarian Government Bond family and a further 2,100 billion forints in the Bonus Hungarian Government Bond. The market has thus entered a transition phase in which the inflationary momentum of recent years is fading and relative demand for fixed-rate constructions is strengthening.
The central bank environment and the yield path
The monetary environment showed a visible shift in the first three months of 2026. On February 24, after nearly a year and a half of unchanged base rate, the Monetary Council of the National Bank of Hungary cut the rate by 25 basis points, lowering the base rate from 6.5 per cent to 6.25 per cent. The March meeting maintained this level. Inflation expectations stand at 3.8 per cent for the 2026 annual average and 3.7 per cent for 2027, while according to the central bank's communication, the price level may rise above the tolerance band from the third quarter and may return to the target range sustainably in the second half of 2027. According to market analyses, the post-election strengthening of the forint, together with the expected acceleration of EU funds disbursement, may provide further room for rate cuts over the medium term.
The forint strengthened from the pre-election level of around 375 against the euro to close to 360, briefly reaching a four-year peak. Performance against the dollar is even more pronounced, with an annual appreciation of more than twenty per cent. Exchange rate strengthening directly reduces the inflation pressure coming through import prices, and if it remains durable, it opens the way to further cuts in the forint base rate. This environment provides a more favourable framework for longer-maturity forint bonds, and the market is currently pricing in further yield decline on the five-year section of the curve for the second half of 2026.
The global pillar — oil prices, Middle East risk, US equities
The international pillar shows the most contradictory phase of 2026 to date. Brent crude was still trading between 60 and 65 dollars in January 2026, then after the late-February US-Israeli action it jumped quickly above 100 dollars, and in subsequent weeks even reached 120 dollars on individual days. The Strait of Hormuz, through which roughly 20 per cent of global crude and liquefied natural gas shipments pass, has become the market's most sensitive risk point. The two-week US-Iranian ceasefire concluded on April 7 eased this tension and immediately led to a significant equity market rally. The S&P 500 rose by 4.5 per cent and the Nasdaq Composite by 7.2 per cent in the week following the ceasefire.
The outlook for the US equity market has nevertheless become more nuanced. On April 6, a major international brokerage cut its year-end S&P 500 target from 7,700 to 7,500 points, citing the persistently higher energy costs and their growth- and inflation-restraining effect. The fundamental arc of the US equity market continues to be supported by expectations of monetary easing, AI adoption and corporate profit growth, while geopolitical risk remains in the background. The market will react sensitively to every news flow around the Strait of Hormuz for the rest of 2026.
What does this mean for the Hungarian investor?
Investor scenarios for 2026 are not unidirectional. On the equity side, the new highs of domestic blue chips are partly supported by the new political path and forint strengthening, but market valuation has already priced in many positive news items. Profit-taking becomes a realistic option, and alongside domestic exposure it is worth arranging international equity exposure as well, particularly in the US technology segment, where rate cuts support growth, but oil price risk is meaningful.
On the government bond side, the choice depends on the yield profile and maturity. Those investing for the short term and seeking a predictable yield will find the simplest choice in the Fixed Hungarian Government Bond family. Those wishing to position for a longer-term rise of the rate path may find a fit in the year-on-year increasing coupon structure of the newly issued MÁP Plusz series. The Premium Hungarian Government Bond's transition to the 4.2 per cent interest period represents a more moderate yield compared with the inflationary momentum of recent years, which may justify rebalancing for some investors.
The greater rebalancing is made particularly interesting by the decline of forint risk and the expectation of EU funds being released. Based on this, longer-maturity forint bonds and selected segments of the domestic equity market may retain their attractiveness through the second half of 2026, while global risks, particularly on the oil market and on the geopolitical side, justify continuous attention and diversification.