Hungary and Latvia shine in mediocre year for European stock markets

LONDON: Top European stocks may have had a mediocre 2015, but outside the continental capitals of finance, the likes of Hungary, Latvia and Slovakia have been delivering bumper returns.

The pan-European FTSEuorfirst 300 is up just 2.6 percent this year, its lowest gain since 2011, but investments in the bourses of Budapest and Bratislava have fared far better than those made in London, Frankfurt or Paris.

Among the euro zone’s top performing stock markets are Latvia, Slovakia and Ireland, while Italy outstrips other blue-chip indexes. The Budapest SE index is up over 40 percent in both euro and forint terms, benefitting from radical measures, including bank taxes and slashing interest rates, implemented by Prime Minister Viktor Orban.

The measures meant that, unlike other eastern European countries, Hungary was relatively well insulated from turmoil after Switzerland scrapped the cap on the Swiss franc in January.

Most economists expect Hungary to return to investment grade next year. Latvia has been lauded for its own reform efforts in the past, and the main Riga index is also up over 40 percent in 2015 – although that has stalled after the Prime Minister resigned earlier this month.

Ireland is set for “spectacular” growth of more than 7 percent, while Italy has also benefitted from improving economic data, having made labour market reforms.

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