Hungary's Prime Minister Viktor Orban and the ruling Fidesz party have won the 3 April election with an even higher share of votes than expected. Fidesz-KDNP won 53% of votes and the joint opposition won 35%, compared with the 50% and 45%, respectively, implied by the last opinion poll forecasts prior to the election.
This means that the super-majority (over 66%) in parliament is likely intact and Hungary is in store for more of the same illiberalism in domestic politics and antagonism with the EU, both over social policy and Russia-Ukraine policy (specifically, arms supply to Ukraine and support for President Zelensky).
But Orban also faces pressure to combat high unemployment (3.8% in 2022, according to IMF forecasts) and high inflation (8.3% last reported), at a time when the fiscal deficit is heading for 5.9% of GDP in 2022 (IMF), and the real interest rate is negative 3.9%. For now, this acts as a constraint on how much he is willing to rail against the EU and jeopardise EU funding.
Equities (BUX Index) were flat in reaction, having risen 17% since the start of March.
That leaves forward PE valuation on a 35% discount to the five-year median and trailing PB valuation on over a 25% discount to the five-year median, which is more attractive than that seen in most EM Europe peers.
Hungary equities are dominated by three stocks: OTP Bank, MOL Magyar Oil & Gas and Richter Gedeon in pharma.