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

Investors in America’s highest-capitalization stock index closed a profitable month in October, as the S&P500 rose 3.69%, while Budapest’s BUX declined by -0.4%. The Hungarian trading floor witnessed some very mixed movements indeed: while OTP strengthened by 9.02%, MOL weakened by -2.56%.

No significant swing in Hungarian bond prices was seen in the previous month as debt securities produced a result of -0.14%, while the forint lost 1.33% of its value against the euro.

Regarding developments at the macroeconomic level, it is important that the Federal Reserve announced a 20% more substantial economic stimulus programme than expected, revealing its intention to buy bonds on the market in a value of USD 600 billion, a move that – according to analysts – is equivalent to a 70 basispoint cut in interest rates. In response to the Fed’s announcement, the dollar weakened considerably against the euro, then began to strengthen robustly, with the exchange rate falling from over 1.42 to below 1.37. The number of those employed in the US rose significantly, by 151,000, according to the labour marketreport for October, which was more than double the expected increase.

Economic growth has slowed (by 0.4%) in the euro zone of the European Union in the past quarter. Germany suffered the most serious slowdown compared to the previous quarter (0.7%), while Spain’s GNPfailed to expand at all.

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The revival of the stock market in 2009 – with equity-market yields of more than 20% – has not been followed by a further upswing this year. Despite two lengthy periods of optimism (in February-April, when the S&P500 rose 15%, and in September-November, when it rose 17%), a breakthrough is yet to come in the stock-market indices of developed markets, most of which are fluctuating within a band of around 15% at present. This is in contrast to a number of emerging markets, which have succeeded in reaching new heights (as in the case of Turkey and Indonesia), or which have approached their highest historical values (as in Brazil, South Korea and India).
As regards the source of economic growth, no great change is expected in 2011. Developing countries will account for the bulk of growth in the global economy. Current expectations are that the BRIC countries (Brazil, Russia, India and China), following this year’s 4-10% growth, may expand by a similar extent next year, while developed economies, burdened by high levels of both public and household debt, will continue to produce slower growth (1.7- 3%). An expansion of 2-3.5% is expected in the Visegrád countries in 2011, falling short of the average of the developing economies.

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