Hungarian Watch Autumn 2014


electionMajor railway construction deals in Hungary

Hungary plans to spend billions of EUR on developing railway infrastructure

Railway construction is a top priority in Hungary. The government intends to spend on railway infrastructural developments at least EUR 3 billion from 2014-2020 EU financial framework. In addition, the government also plans to participate in several EUR billion worth railway deals backed by Chinese loans. Switelsky, Közgép, Alstom, Bombardier, Stadler, Skoda, Pesa, and T-Systems may be involved in major projects. The future is extremely challenging, so investors should keep an eye on forthcoming tender developments.

energy sectorConstruction of South Stream Hungary may start soon

Huge deal

South Stream is the major global energy project which would secure the Russian natural gas supply to Western Europe. The EC opposes the project because of antitrust concerns, but member states are resolved to implement the deal. Hungary wants to start the construction of its section in the next six months. As selection of companies involved in the construction of the Hungarian portion of the pipeline may take place in the very next months, this is the last chance for investors to step in.

molWho will the lucky buyer be?

Citigroup sells its Hungarian consumer businesses

Due to global strategic considerations Citigroup has just announced that it will sell its very attractive Hungarian consumer business. Citibank Hungary is one of the leading players in private banking and credit/debit card business. Most of the large universal banks operating in Hungary are very interested in such businesses. Therefore, some of the main competitors, such as KBC, Raiffeisen, Erste, Unicredit, GE Capital, Intesa Sanpaolo, Sberbank and AXA could become the potential buyers. Press suggests that Citigroup has just started to look around for interested buyers, so it seems that this is the perfect time to seize this exceptional investment opportunity.

olympic gamesA new Chinese market breakthrough

RZBC to establish a citric acid plant in Hungary

After the press had reported several golden Chinese investment opportunities, another Chinese player, RZBC announced to build its citric acid plant in Hungary. The new Hungarian factory would produce 100,000 tons of citric acid annually covering 5% of the global market. The investment volume is expected to be close to EUR 100 million. The project is in the relatively early stage, so it is still not too late to catch up with this investment opportunity.

shared servicesMOL moving toward more acquisitions?

EUR 5 billion-worth DEA, the next potential target

After concluding major transactions with U.K operators, Wintershall and Premier Oil, the Hungarian MOL is likely to continue its expansion in the field of global exploration & production. We may shortly hear MOL announcing a new acquisition. The newest target may be DEA, a prominent player in the field of exploration & production. If the planned deal to sell DEA to the Russian Mikhail Fridman led group of investors falls apart, MOL will most likely reopen talks about purchasing DEA. It remains to be seen how the story will end, but it is evident that MOL has a strong appetite to expand further by purchases of equities of Western exploration & production companies.

new civil codeTesco is about to check out from its Hungarian operations

Tesco as one of the world’s leading grocery and general merchandise retailers might consider leaving the CEE region, including Hungary in order to strengthen its UK position. This would be a major opportunity for Hungarian competitors such as Aldi, Lidl, Spar, Penny, CBA, Auchan and Metro. As analysts give close to fifty-fifty chance for this strategic decision, investors shall carefully follow the upcoming developments of Tesco.

shared servicesOnly the best will survive in Hungary

Banking industry still in turmoil

The Hungarian banking industry is still in turmoil. Conversion of foreign exchange loans and the introduction of the bad bank will have a significant impact on the sector. There may only be room for five major banks in Hungary, noted Márton Nagy, the managing director of Central Bank of Hungary. On the other hand, the government is still resolved to purchase a new bank. Overall, it is worthwhile for investors to keep a close eye on the upcoming developments in banking.

new civil codeHungarian automotive industry is still out in front

New major investments expected

The automotive industry remains as one of the great success stories of the country. The press regularly reports about production expansions, improvement of supplier networks and new greenfield investments. Audi, Patec, BorgWarner, Robert Bosch and Alumental will soon make new investments. The automotive industry definitely deserves great attention.

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