Beyond general information of the Funds, the portfolio reports offer a strategic overview on the latest performance.

Last month was the best September in the history of the US stock market since 1939, as the S&P500 index rose by 8.9% after an August that had, by contrast, turned out to be the worst period in 30 years. The shareprice movements point to a high degree of high volatility; however, the US index remained within the previously established band until the end of the month, when it managed an upward surge, giving an impetus to those of the emerging market equities that were already breaking their earlier records, of which India (11%) and Turkey (10%) stood out the most this time.

The other emerging markets, however, were only characterised by restrained optimism, as Europe (+1.5%) continues to be held back by the economic problems of the PIGS group of countries, while in Japan (+3.1%) it was only the central bank’s currencymarket intervention to curb the strengthening of the yen that gave any reason to be optimistic. (All yields are stated in their respective currencies. Due to the 5-10% strengthening of the forint, the yields expressed in the Hungarian currency do not fully reflect the increases that took place in the stock markets.)

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Hungary was among the first (the second after Sweden, to be precise) to impose a bank tax, but still, it was not so much the speed of its introduction as the extent of the tax that brought it into the focus of attention. This year, banks operating in the Hungarian market will have to pay HUF 187 billion, which given the bank sector’s HUF 175 billion profit for the first half represents a considerable deduction, especially in view of the fact that the tax, which is levied on the balance sheet total, does not take into account the banks’ profitability. (The banks intend to raise almost HUF 20 billion towards the bank tax through additional injections of capital.) Since the announcement in early June, banks in Hungary have underperformed the market: the Polish banks have risen 15% and the Czech banks by 10%, while OTP remains roughly where it was at the end of May. Of the three large stock exchange-listed banks with a presence in Hungary, this impact was most readily apparent in the case of OTP, since the Hungarian assets of Erste and Raiffeisen only account for 7% and 25% of their total assets respectively.

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