Client information of Aegon Hungary Investment Fund Management Co.


Dear Clients, Investors,

Hereby we would like to inform our clients about the effects of the extraordinary military conflict on the capital market and the suspension of Aegon Russia Equity Investment Fund.

The Russian invasion of Ukraine on 24 February 2022 and the consequent announcement of Western economic sanctions will have a serious impact on the regional stock and bond markets in the short term. The disconnection of a significant number of Russian banks from the international SWIFT system, the banning of Russian aircrafts from the airspace of EU member states, the USA and other countries, and the freezing of the assets of some Russian citizens are expected to cause severe damage to the local and global economy as well. The situation may change radically from day to day, which could cause significantly higher-than-usual volatility in global equity, commodity and foreign exchange markets.


Bond markets

Russian and Ukrainian bonds:

We might have seen some kind of progress during the week in the resolution of the Ukrainian-Russian conflict as the demands for a peace by the Russian counterpart seems a bit dialed down compared to which we have seen at the outbreak of the war. Having said that, a final resolution still looks distant at this point, but chances to see an agreement is somewhat higher than before. The Ukrainian hard currency government bonds have approached their recovery value (the value where defaulted bonds usually trade after restructuring) on Wednesday, which means approximately 40-50% price increase compared to the levels of early last week. We have seen the same pattern for Russian government- and corporate bonds.

One addition to the somewhat upbeat sentiment around Ukrainian and Russian bonds is that both issuers have honored their liability and paid coupon and capital in USDs during the week.


Central and Eastern European bonds

Regional government bonds have performed relatively well during the week, however risks are still pointing upwards for yields. Yields move in opposite direction to prices for bonds. This means that if yields go up, prices fall and vice versa. Regional currencies have performed well too. The Hungarian forint reached 370ish levels against the euro after touching 400 before. The better sentiment around the Ukrainian-Russian conflict and the somewhat lower energy prices boosted the currencies’ performances. Another positive development was that it seems that the EU, taking the conflict into consideration, is willing to suspend the rule of law mechanism against Poland and Hungary for the time being, thus the chances improved that the two countries will receive EU payments.


Stock markets

Russian stock market:

The Moscow Stock Exchange announced on 12 March that the local stock market will be closed between March 14 and March 18. In addition, the ban of sales of securities by non-resident participants remains in force. Earlier this week, the EU announced new sanctions against Russia, including restrictions on state-owned companies and import-export restrictions. However, there has been some progress in the negotiations between the Ukrainian and Russian sides, but it is too early to talk of a major breakthrough.



Global stock markets:

For most of the past week the news of the Russia-Ukraine conflict has dominated global investment world. When it seemed that the parties would reach an agreement, markets rallied, but when it became clear that an agreement was still a long way off, markets sold-off. The impact of the war is still present in commodity markets. Although crude oil has fallen back to the $100 level it is still significantly higher than at the beginning of the year, also wheat prices are 25% higher than when the war broke out. A prolonged war increases the chances of persistent inflation, which could have a negative impact on equity markets. The US Federal Reserve raised its benchmark interest rate by 25 basis points at its March meeting, and the Fed chairman said at the press briefing that their top priority at the moment is to contain inflation. As a result, bond markets have priced in 5 more rate hikes for 2022.



CEE stock markets:

After the bad mood in stock markets due to the war, the last few trading days have seen a positive trend in regional stock indices, with all Central and Eastern European stock markets rising by around 5-6% over the past week. Accordingly, valuations have improved from previous extreme depression levels, but are still priced in at a significant discount. Regional banks have posted strong appreciation of over 10%, regardless of whether they have had indirect exposure to Russia-Ukraine. Erste and OTP, which have previously experienced a panic sell-off, have seen their shares rallied 12-15% in their own currency, but Polish banks have also risen by a similar amount. The share price of LPP, the fashion chain with the largest direct exposure, has also managed to rise by over 7%.


Our previous announcements about Aegon Russia Equity Investment Fund you can reach on the following link:


We further inform our Clients that the suspension of the Aegon Russia Equity Investment Fund will not result in any change in the operation and solvency of the Aegon Hungary Investment Fund Management Co.


March 18. 2022.

Aegon Investment Hungary Fund Management Co.



The information contained in this communication is for informational purposes only and does not constitute an investment recommendation, offer, investment advice or solicitation. The information contained in this communication may change. Past performance is no guarantee of future performance of the investment funds. Aegon Hungary Investment Fund Management Co. is not responsible for the investment decision and its consequences made on the basis of this information.

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