Although police prepared itself for further attacks of violent protesters, Budapest had a peaceful night on Thursday, without any atrocity.
Our view:
In our view, the fact that largest opposition party Fidesz decided yesterday to withdrawn from planned big protesting event on Saturday, a bit cooled down the mood of protesters. Market also reacted positively on the decision gaining sharply after the announcement yesterday afternoon. Later, however, concerns renewed as ML warned that investors that they might underestimates risks regarding Hungary and that as WSJ compared the situation in CEE to the Asian crisis in 1997. Since we have a feeling that the situation in Hungary might normalize day by day, we see a gradual recovery of the stock market in the short-term. Mid and long-term performance of the market, however, depends on how much political power the PM left to push through structural reforms. As the situation expectedly normalizes in the country, we could be able to answer this question in the next 1-2 months.