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Zsolt Kuti

is director at the Central Bank of Hungary, heading the Monetary Policy and Financial Analyses Directorate. He is responsible for the preparation of decision support materials for monetary policy strategy; managing financial market monitoring; analysis of the latest macro financing developments of the Hungarian economy. He is author and co-author of several publications and studies. He has obtained Master degree on Finance at the Budapest University of Economic Science and Public Administration and also on Economics at the Central European University.

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Role of the non-resident investors on the Hungarian government bond market

The presentation examines the ownership structure of the Hungarian government bonds and its changes, with the focus on the role and composition of the non-resident market participants. The overall international experience shows that the high proportion of non-residents could raise the vulnerability of the sovereign in crisis situations, whereas the higher proportion of residents helps to achieve stability. The vulnerability can manifest itself in higher volatility on bond markets. The rapid decline of the non-resident proportion in Hungary after the Lehman crisis also showed the risks of the high share of non-resident investors. The recent accumulation of the non-resident stock in 2010-2013 and the increasing market concentration naturally poses the question of risks. At the same time better and more stable fundamentals could have mitigated the related exposure. Moreover, research at the NBH shows that in the last period a more stable investor base have built out: the share of institutional (“real money”) investors, who generally have longer investment horizon and use lower leverage has increased significantly in recent years. This development can also decrease the risks related of the high non-resident share.

Last modified: 2018.11.30.