Beyond general information of the Funds, the portfolio reports offer a strategic overview on the latest performance.

At the start of February the National Bank of Hungary (MNB) announced that it would launch a programme to support the development of the forint mortgage loan and mortgage bond market, and the first buyback auction was duly held on 10 March. In this regard, our aim here is to outline the current status of the mortgage bond market in Hungary, to discuss the motivations that drive players in the market, and to assess the possible impact of the announced MNB programme.

The MNB’s announcement of 10 March 2010 stated: “Market players submitted bids totalling HUF 21.5 billion in the secondary market purchase tender for mortgage bonds held for the first time by the MNB on 10 March 2010, with offers received for nine of the ten advertised mortgage bonds. Taking into account the information on secondary market prices at its disposal, the MNB adjudged that the bids were significantly less favourable than market yields, falling at least 50 basis points short of the latter, and for this reason it declined to accept them and declared the tender unsuccessful.”

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Crisis management in Greece – no need for the “Greek yoghurt” recipe, we know it already

“Give not that which is holy unto the dogs, neither cast ye your pearls before swine, lest they trample them under their feet, and turn again and rend you.” So it says in the first book of the New Testament, the Gospel of Matthew. But what are these pearls, and who are the pigs, and who is casting all this before them and why? Let us examine, therefore, the background to the complex question above.

Apart from its meaning in English, PIGS is a pejorative acronym in financial jargon which began to be used by British and North American journalists in 2008 in articles on economics and finance. The acronym is comprised of the initials in English of four Southern European countries: namely, Portugal, Italy, Greece and Spain. All of the countries in question are members of the European Economic and Monetary Union (EEMU), but at the same time have always been regarded as stragglers within the EEMU according to a number of criteria. Their economic performance is mixed, as they are mostly characterized by high levels of unemployment, a frequent lack of budgetary discipline and often serious current account deficits, the latter giving cause for concern over their stability due to mounting public debt. This has the knock-on effect of casting a shadow over the stability of the euro and the entire common economic area. Lately both Ireland and Great Britain have also joined the PIGS list, expanding the original acronym to PIIGGS. Let’s not forget, however, that while the official currency in Ireland is the euro, in Great Britain the pound sterling remains in circulation. The Quantum Hedge Fund managed by Hungarian-born George Soros played a very considerable role in the latter, when it earned billions of US dollars by short-selling pounds sterling in 1992, bringing the Bank of England to its knees and forcing the UK – under the pressure of speculation – to withdraw from the European Exchange Rate Mechanism (ERM). By an interesting quirk of fate, looking at the events with the benefit of hindsight this was not necessarily an unfavourable development for the country.

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