Investor Sentiment Turns Constructive on Hungary
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We have updated our Equity Top Pick List to reflect the events of the past quarter. The list includes those stocks, typically US and European ones, that we consider to be proper investment choices from a fundamental point of view. It can provide a starting point for building a sector-diversified equity exposure in portfolios, but can also be used as a watch list. Technical analysis should be used to time / determine the specific investment decision.
Could the momentum return in the semiconductors?
The semiconductor sector has had a challenging quarter, with its performance in recent months lagging behind improvements in underlying fundamentals, even as AI-driven demand remained exceptionally strong. The accelerating adoption of AI by enterprises and the proliferation of AI agents are significantly increasing the demand for computing capacity, which points to a further surge in cloud services and data center investments. Given current supply constraints, record-high backlogs, and higher-than-expected investment needs, we expect further upward revisions to earnings forecasts in the semiconductor industry. Nevertheless, the sector’s valuation appears favorable from a historical perspective, which, in our view, could result in a more attractive risk-return profile in the coming months.
Over 25 senior financial professionals, active in CEE markets and managing more than EUR 6.5 billion in assets under direct control, participated in our Institutional Investor Survey. Here, we highlight the most notable insights.
Hungarian assets re-rate sharply as election risk fades. Investor sentiment has turned decisively more constructive after the April vote, with 72% now expecting EUR/HUF below 360 over the next three months. The shift suggests investors are increasingly pricing a lower Hungarian risk premium, supported by a more predictable macro policy mix, eurozone-convergence ambitions and improving disinflation confidence.
Investor sentiment toward Hungarian equities improved sharply compared with the March survey. 60% of respondents are now slightly bullish on the BUX Index, up from 23% in Q1, while bearish and slightly bearish views fell from a combined 34% to 12%. The Hungarian market had still been trading at a meaningful discount to the region before the election, despite some narrowing, mainly due to the poor perception of domestic economic policy. The change in government could support a further decline in Hungary’s equity risk premium and trigger convergence toward Poland, a market with which Hungary had moved closely for several years before 2022.
The CETOP outlook also improved, but less dramatically. The CEE stock market (CETOP) is expected to deliver around 25% profit growth this year, broadly comparable with the US, but without relying on AI- or technology-driven earnings momentum. This makes the region attractive in a scenario where global equity leadership broadens beyond US megacap technology.
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