Everything which strengthens the stock exchange serves the development of the Hungarian economy as well, Prime Minister Peter Medgyessy said at a press conference held at the Budapest Stock Exchange on Tuesday.
Medgyessy paid a visit to the exchange and rang the opening bell for Tuesday's session.
Privatising companies by floating their shares on the stock exchange is the most transparent and unassailable method of privatisation, he noted. The government plans to use revenue from privatisation to fund infrastructure development, he added.
The Hungarian government's firm intention is for the country to be well-prepared to join the European Union in May, 2004, the Prime Minister said. This means as well that Hungarian companies should be sufficiently capitalised, and one form of achieving this is by drawing in new capital through stock exchange issues, he said.
Everything which strengthens the stock exchange serves the development of the Hungarian economy as well, Prime Minister Peter Medgyessy said at a press conference held at the Budapest Stock Exchange on Tuesday.
Medgyessy paid a visit to the exchange and rang the opening bell for Tuesday's session.
Privatising companies by floating their shares on the stock exchange is the most transparent and unassailable method of privatisation, he noted. The government plans to use revenue from privatisation to fund infrastructure development, he added.
The Hungarian government's firm intention is for the country to be well-prepared to join the European Union in May, 2004, the Prime Minister said. This means as well that Hungarian companies should be sufficiently capitalised, and one form of achieving this is by drawing in new capital through stock exchange issues, he said.
Medgyessy stressed that the current government promotes saving, but the general public will have to increase its own share of savings, and in a timely form. Currently, some 64pc of households hold their savings in bank deposits and cash, which compares to just 30pc in EU countries. According to the latest data from the National Bank of Hungary, people had total savings of HUF 12,207bn in 2002, of which cash and bank deposits accounted for HUF 5,178bn (42.4pc), savings in stock exchange shares for HUF 157bn (1.3pc), stakes in companies which are not traded on the stock exchange for HUF 3,493bn (28.6pc), state securities for HUF 1,000bn (8.2pc), savings in life assurance and insurance policies for HUF 1,462bn (12pc) and investments in funds for HUF 739m (6.1pc).
Household savings are also necessary to increase self-sufficiency, Medgyessy said. Chairman of the Budapest Stock Exchange Gyorgy Jaksity added that measures introduced by the present government, including tax reform, stock exchange privatisations, the continued pension reform and a planned health system reform will help capital markets and have, in fact, already shown short-term results. Turnover on the Budapest stock market, which has a capitalization of more than HUF 3,177bn, is slowly growing. Stock exchange capitalisation is about 20pc of GDP in Hungary.
The BSE, which will mark its 13th anniversary on June 21, broke records between 1998 and 2000. Capitalization was well above HUF 4,000bn in 1999 and monthly average turnover was HUF 300bn between 1998 and 2000, compared to a third of that at present.
The BSE plays an important role in drawing in foreign capital. Foreign investment represents about HUF 10bn on the shares market and about HUF 10bn elsewhere. The combined value of these two investments is near the level of FDI flowing into the country, Jaksity said.