Countries of the World/COUNTRYS.BIN/dp/0162/01623.txt

Text File | 1991-06-25 | 20KB | 381 lines

$Unique_ID{COW01623}
$Pretitle{365}
$Title{Hungary
The Hungarian Stock Exchange Tomorrow}
$Subtitle{}
$Author{Hezsef Rotyis}
$Affiliation{Embassy of Hungary, Washington DC}
$Subject{hungarian
foreign
hungary
business
exchange
stock
companies
tax
trade
association}
$Date{1990}
$Log{}
Country:     Hungary
Book:        Foreign Policy Basics
Author:      Hezsef Rotyis
Affiliation: Embassy of Hungary, Washington DC
Date:        1990

The Hungarian Stock Exchange Tomorrow

JOZSEF ROTYIS, DEPUTY MANAGING DIRECTOR, BUDAPEST STOCK EXCHANGE

     Three months have passed since the foundation of the Budapest Stock
Exchange, and the first difficulties have been overcome successfully. Within
stock exchange transactions trading in stock has become determinative, with
transactions initially based on a single kind of security (IBUSZ stocks)
gradually being replaced by a more balanced structure of trading. As a result
of this, trading is now based on 5 or 6 kinds of stock, and this number is
rapidly increasing. The stock-exchange regulations have also been drafted,
providing rules for quotation and trading and the financial and physical
execution of transactions at the stock exchange.

     However, more important than the events of the past three months is what
can be expected in the three months to come, how the stock exchange can meet
the requirements of capital market becoming stronger and stronger, and how it
can contribute for its part to the development of that market.

     This period is of extreme significance, since this will be the time when
the first wave of privatization will take place through the agency of the
stock exchange. One third of the enterprises announced for privatization by
the State Property Agency, and actually two thirds of their capital, would
likewise be sold by the state on the stock exchange. The capital of the
issuers of stocks thus becoming introduced to the stock exchange is to be two
and a half times as much as the total of capital in possession of the
currently most active 5 or 6 issuers of stocks.

     To this supply of stocks will be added the non-privatization-related
introductions to the stock exchange, as the result of which a supply will be
created that will provide most diversified investment opportunities for the
resources - primarily foreign ones - expecting to be mobilized. As a condition
of introduction, the stock exchange requires a continuous supply of
information, which is absolutely necessary for potential investors.

     Smooth trading and stock exchange stability are conditioned on the
financial and physical execution of the deals concluded and on the
availability of a securities safe-keeping and recording system which permits
a prompt fulfi1lment of the deals concluded on the stock exchange.

     Within a few weeks the currently non-regulated system will become one
regulated by the stock exchange, which will ensure financial fulfillment, by
means of a clearing system, on the fifth day following the transaction (T+5)
and will also guarantee the financial fulfillment of the stock exchange
transaction. The physical execution (handing over of the securities sold to
the buyer) will take place on the sixth day following the conclusion of the
deal. This is the way by which the functioning of a multilateral clearing
system can currently be solved in Hungary.

     The stock exchange naturally wants to create such conditions as permit
the establishment of a central safe-deposit and the fulfillment of
transactions through securities-related accounts.

Bridging the Ocean

     We asked Tibor Zselinszky, secretary of the Hungarian-US Business
Council, about the antecedents and Hungarian expectations. He told us that
beyond the outstanding events their permanent task was the bringing together
of business partners. This year 600-700 American partners visited the Chamber,
and they were able to meet at least 1500 to 2000 Hungarian firms. He
unfortunately was insufficient information on how successful these meetings
have been, what the partners agreed on, and what business has been concluded.
Although it is voiced repeatedly at section meetings that the Hungarian firms
consider such events useful and successful. Perhaps they also had a role in
the fact that recently several new joint companies have been established
every week. At present 350 Hungarian companies are members of the USA section
of the Chamber, their number having increased by ten percent in the last year,
and it is conspicuous that smaller and private firms have been applying for
membership recently. There is already a private Hungarian firm, Graphisoft,
which has recently opened an office in San Francisco.

     According to Mr. Zselinszky, the Hungarian-US Business Council works well
together with the AMCHAM (American Chamber of Commerce in Hungary), arranging
programs together, and recommending partners to the American organizers.
Incidentally this Budapest Office is the first such branch of the American
Chamber of Commerce in Eastern Europe.

     Zselinszky told us that one of the biggest events of the section this
year will be "Discover Hungary", and after the economic days the sixteenth
session of the Hungarian Business Council will also be held in New York on
October 25-26. At this probably 40 Hungarian firms will be represented. As he
said, the agenda of the session includes topics which are at present most
interesting to the American partners, as e.g. the recently established
Budapest Stock Exchange, privatization, the problems of accounting and
property assessment, the 1995 Budapest-Vienna world exhibition. The Hungarians
would like to present at the session the projects in which Americans may
invest. The question of changing markets also promises to be an important
topic, viz. that instead of its weakening Eastern markets Hungary has to
change to Western markets, and what assistance it can get in this from the
USA, e.g. through the inclusion of high-tech. From the American side lectures
will be delivered on trade between the two countries, the USA export licensing
system, the already achieved relaxations, and what steps can be expected in
future.

     Up for discussion is whether Hungarian experts may join in the
exploration of hydrocarbons. It is expected that Americans will engage in
considerable prospecting in Siberia, and it has arisen that since there are
excellent experts in Hungary, for instance the specialists of the Lorand
Eotvos Geophysical Institute and of the OKGT National Oil and Gas Trust,
they could join in this work, of course together with Western firms, as their
subcontractors.

(murai)

Making Hungary Known

Interviewed: Ms Panni Furst, Director, HCC

     We asked Ms Panni Furst, Director of "Discover Hungary - New Business
Opportunities" about the goals and expectations of the Hungarian organizers.

     "We want first of all to introduce the economy, industry and trade to
American business people, to show them the changes recently experienced in
Hungary, and last but not least to assure them about the Hungarian economic
situation and about the guarantees given by the Hungarian government so that
they could engage in business activities in the same way they are used to
doing elsewhere and encourage them to come to Hungary."

     Although this time a lecture series and exhibition will be organized
only in New York the initiative - suggested primarily by US business
circles - is in fact a follow up of a previous action of 1987 when Hungarian
traders and companies introduced themselves in three US cities, Boston,
Atlanta and Denver. However, it is hoped to organise a Hungarian trade
promotion program in future years to visit other cities of the US, discovering
new territories for Hungarian traders and entrepreneurs. At present
US-Hungarian trade concentrates mainly on the eastern side of the States.

     As Ms Furst said, their US partner, the World Trade Center has joined in
promotion and organizing work with great enthusiasm and advertized the
Hungarian events i