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Capital Markets

Equity markets: Budapest bourse fights for its life

Rapid privatization in the 1990s in which foreigner investors took many of the best prizes has left the Budapest stock market in a fragile state. After a recent foreign attempt to acquire one of the exchange’s few blue chips, Hungary’s government and companies are on the defensive. Dominic O’Neill reports.

Gyurcsany sticks to his guns


THE BID BY Austrian energy company OMV for its Hungarian counterpart, Mol, has become one of the most exciting and intriguing M&A stories in Europe. A great deal is at stake, not least the survival of the Budapest Stock Exchange as an effective market.

The potential transaction has generated plenty of debate in Hungary and beyond and has prompted politicians in Budapest to draw up a law to make any hostile takeover of its national energy champion as difficult as possible. Ferenc Gyurcsany, Hungary’s prime minister, is particularly concerned that Mol could end up in the hands of a state-owned rival. The new law, in turn, has led some EU officials to voice their own concerns – that Hungary might be using overly protective measures to defend Mol that undermine the free market.

So much more is at stake than a company valued at some $20 billion. The deal has important implications for the Hungarian capital markets. If successful it will undermine a local stock exchange that is already handicapped by a paucity of blue-chip companies. OMV’s advance in the summer on Mol, the biggest company on the Budapest Stock Exchange, was a rude awakening for Hungary.


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