Strategy Note /

Hungary: Orban's Fidesz favourite to win tightest election since 2006

  • PM Viktor Orban and Fidesz have dominated for a generation; ruling coalition has 67% of parliament pre-3 April election

  • Unified opposition and rising inflation and unemployment makes election competitive but Fidesz has 5pp opinion poll lead

  • Equities (bank OTP, oil & gas MOL, pharma Richter Gedeon) on 35% discount to 5y median PE, cheaper than EM Europe peers

Hungary: Orban's Fidesz favourite to win tightest election since 2006
Hasnain Malik
Hasnain Malik

Strategy & Head of Equity Research

Tellimer Research
1 April 2022
Published byTellimer Research

Hungary's Prime Minister Viktor Orban and the ruling Fidesz party have dominated Hungarian politics for a generation. But, on 3 April, they face their toughest electoral challenge since 2006. Nevertheless, Fidesz still enjoys a 5 percentage point lead in opinion polls.

An incumbent victory obviously entails a continuation of existing policies: resisting EU policy consensus on social ('pro-family') and foreign (Russia-Ukraine) issues but not by enough to fall foul of EU conditionality for releasing development funds to Hungary.

The competitiveness of the election is a result of the unification of opposition parties in an electoral pact at the end of 2020 – after three election cycles when their disunity fragmented the vote – and because economic indicators, eg the misery index of inflation plus unemployment rate, are deteriorating.

The joint opposition is made up of diverse parties – from the left, green and right – but is generally more pro-European, pluralistic and anti-Russian than Orban's Fidesz-KDNP coalition. An opposition victory would de-risk access to EU funds, which Orban's illiberal social policies have, at times, jeopardised, similar to Poland.

The main risk is how, after 16 years in power, Orban reacts in the unlikely case of a defeat.

Victor Orban's Fidesz has dominated for a generation

A unified opposition poses a challenge not seen since 2006

Hungary Inflation and Unemployment both on the increase

Neither economic deterioration nor Orban's closeness to Putin have hurt his opinion poll lead

Equities underperforming and relatively cheap

Hungary equities are dominated by three stocks: OTP Bank, MOL Magyar Oil and Richter Gedeon in pharma. Hungary has underperformed EM Europe peers this year, particularly OTP and Richter Gedeon, and is valued significantly more attractively, relative to history, compared with those peers.

Hungary's index of mainly 3 stocks: bank, oil & gas, pharma

Hungary equities on a 35% discount to 5y median PE

Hungary equities cheaper vs history than EM Europe peers

Related reading

The countries exposed to Russia's economic crisis, 2 Mar 2022

Russian oil embargo impact, 7 Mar 2022