http://portfolio.hu/en/cikkek.tdp?k=2&i=19876&p=5

Royal Bank of Canada

"The outcome should help to support Hungarian financial markets and opens up the prospect that Fidesz will win a two-thirds majority when the second round of voting takes place on April 25. This would allow the new government to make more deep-rooted reforms, in the areas of local government, the welfare system etc., which would allow for bigger and longer lasting cuts in the budget deficit and government debt/GDP ratio," commented Nigel Rendell, research analyst at RBC in London.

Positive for financial markets

"There is little doubt that a Fidesz victory of this magnitude is a best case scenario for the financial markets. However, up until Sunday’s first round vote the probability of such an outcome seemed slim," Rendell said.

It appears that many of the 'undecideds’, which amounted to 30-40% in recent opinion polls, voted for change and backed Fidesz, he noted. Yesterday’s result, with the prospect of more to come, is @HUF supportive and is good news for the local rates’ market (long end rates are some 20bp lower this morning)."

"Fidesz has yet to outline its economic policy in detail, but the emphasis under a strong mandate from the electorate would be on supply side measures - further cuts in public spending and potentially phased reductions in tax rates to boost competitiveness and encourage greater worker participation in the labour market. A central plank of its election campaign is the creation of one million new jobs over the next 10 years and a precautionary loan facility from the IMF, with the latter seen as a way of enhancing policy discipline and creditability," Rendell said.

Against this background, and assuming global financial markets remain stable, he continues to believe that official interest rates will be reduced further, with another 50bp of cuts to 5.00% by mid-year.

"Further ahead the monetary bias is likely to remain on an easing tack until there is convincing evidence of a pick up in the domestic economy."

http://portfolio.hu/en/cikkek.tdp?h=16&k=2&i=19875

Hungary’s centre-right Fidesz party has won 206 seats in Parliament out of the 386 available in the first round of general elections on Sunday, the National Election Office has said. The "race" will continue for the 121 remaining mandates in the second round on 25 April.