July 18, 2010
Monday may be a good time to pick up Hungarian assets on the cheap. The IMF and the EU walked away from negotiations with the Hungarian government on Saturday after the latter refused to give in to the international organisations’ demands for more clarity on the country’s plans for tax and spending. It seems safe to assume the Hungarian forint will start the week with a sharp lurch downwards.
And in a world where a misspoken word by a formerly obscure town mayor in a provincial city in eastern Hungary can wipe out trillions in global asset values, it is likely the impact of this weekend’s events will make itself felt in emerging markets from Malaysia to Argentina.
All parties said talks would resume, but the uncertainty is the last thing Hungary, or any other emerging market needs to see right now.
The EU and the IMF wanted to see a commitment to spending cuts, reforms to ill-run state enterprises like the railways, and a clearer picture of how the government would be raising revenues.
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