Monthly Archives: October 2012

Hungary back on the tightrope

It’s the kind of news that must make capital markets folks bang their head on a wall, but the Reuters headlin can’t be ignored: “Hungarian government denies IMF talks have broken down.”

If anyone’s gotten the wrong idea, it might have something to do with what Hungary’s chief aid negotiator Mihály Varga was quoted as saying: “We are once again in the clutch of foreign forces; once again a remote interest is bringing trouble on our heads.” The context of the statement is telling, as Varga reportedly said this on October 23, the day Hungarians commemorate the 1956 Hungarian uprising against the Soviet Union. He said that while “the boots of foreign soldiers are not trampling on our soil, our country is still in shackles.”

It’s all very well claiming this is just for public consumption, except it sounds awfully like the public is being prepared for some looming battle.




Friday good news

Friday’s a terrible day for bad news. So we’ll be looking for some good news to kick off the weekend with. We were inspired by the first piece of positivity to come out of the Iberian peninsula in who-knows how long.

Hard to believe: Portugal maybe doing better?


Expo pragmatism

How was the mood at Expo Real? Without really having the time to go into the question very deeply at the moment, what was surprising about it this year was the lack of pessimism. This is in part the power of lowered expectations. If 2008 was total shock and bewilderment, 2009 was just plain deep despondency while in 2010, there was perhaps some glimmers of hope that perhaps looked a bit naive a year later when the Euro seemed to be crashing in the second half of 2011.

Basically, it was about what you’d expect for a year in which the first six months saw a decent number of deals going through, while the second saw a retrenchment setting in. One major developer was pleased to see some senior people from banks actually showing up, bringing with them specific plans and policies for new loans. You also hear less moaning these days about the lack of capital, as the companies with the know-how and financial muscle to do projects and investments are doing just that.

It’s been said so often that there’s “plenty of equity around” that it was eye-opening to hear some fund managers complain they were having real trouble coming up with the money to spend on good deals. Business is moving on, but there are fewer, and different people doing it now. So, a boatload of pragmatism, a decided lack of the usual doom and gloom, and a hint of confidence by those who’ve been left standing. Could be worse.

To take part in a survey, write us with a couple sentences of your own thoughts and observations about Expo this year (mclean % cijjournal dot com  ).

Mint Investments completes Olomouc City acquisition

Mint Investments has completed its purchase of Olomouc City in a transaction made possible by a forced auction, led by the Naxos auction agency. One of the conditions of the purchase was that the buyer pay for the asset within 30 days, and with this condition cleared, the transactions has been closed.

Mint Investments partner Sebastien Dejanovski said he’d been pleased his company had been able to pick up the shopping center at what he called an interesting price (CZK 373m/€15m). “At the moment, there are quality tenants in the center. What’s more, we’re certain Olomouc City has great potential for further development. However, for us, what’s crucial is that it fits in perfectly with our retail property portfolio.” The company owns Laugaricio in Trencin, OC Rynovka in Jablonec, Cestlice Retail Park, and its newest center, Breda & Weinstein, is about to open in Opava.

IMF pushes stand-by loan idea for Hungary

Are IMF and Hungary really talking about such different things? Couldn’t it all just be pre-negotiation banter, ahead of a deal that was always going to happen? Prime minister Viktor Orban may have put out a rather defiant-sounding list of items that are not on the table for the Hungarian government, but when it comes down to it, the IMF doesn’t seem to be asking for that anyway.

Instead of slicing more costs from the budget, it wants Hungary to commit itself to growth policies and a pro-business approach. Now, this sounds benignly positive, but it’s likely a veiled criticism of the ad-hoc series of taxes and special charges that have been levied on various sectors and businesses. And you can’t help thinking about all the strategic companies (oil, gas, water) that the government in Budapest seems to want to take back into its control through buy outs. The IMF’s point seems to be that Hungary needs to rebuild corporate confidence with greater predictability in policies.

Completing a deal with the IMF would do a great deal to solidify confidence in Hungary’s economy, and its government. What remains to be seen is if Orban thinks he has enough political capital to spend on such an agreement.

The easy life

This is definitely our favorite headline of the week:

Orbán: Hungary can solve problems without IMF but loan makes life easier

It definitely sums up the last several months of “talks” between the embattled government in Budapest and the International Monetary Fund, which you get the feeling wants to lend Hungary the money for the good of the world, but would secretly rather let the country sink. Orban has said in the past that he won’t allow Hungary to lose control over its own destiny to the money counters, and that the country will never be a colony of Brussels, or Washington DC. This is arguably a good way of avoiding the fact that it’s too late for that. But headlines like this, rightly or wrongly, make him sound like a recalcitrant teenager asking his father for money, but making it clear that he doesn’t actually need it and not to expect any gratitude. Still, for anyone who’s hoping life can start getting back to normal in the country, this is probably progress.

For a bit more context, which is probably appropriate rather than just repeating headlines, here are some of the quotes (hat tip PoliticsHU):

“Hungary is stronger today than it has been in the past and it is not dependent on anyone. We can overcome all troubles on our own, including financial and economic problems, using our own resources,” Orban said.

“The IMF loan would obviously help a lot because Europe is in a serious crisis, and another wave of crisis is approaching that will also affect Hungary. This will be easier to fend off if there is a safety net behind us. We could manage without it, too, but this would require more energy and would be more expensive,” Orban said…

“It is unacceptable that we should cut pensions, wages, child support or jobs.”

If we understand correctly, Hungary could use the loan because Europe is in crisis. And structural changes are not on the table. If we’re misinterpreting this, please let us know.