Trump Trade's European Jolt: Hungary's Market Surge

As the U.S. presidential election heats up, investors worldwide are keeping a close eye on the potential impacts of a Trump re-election. While the U.S. markets have shown mixed reactions, the "Trump trade" is making waves across the Atlantic, particularly in Hungary. This article explores how the "Trump trade" is influencing European markets, with a focus on Hungary's market surge.

The "Trump trade" refers to the view that less regulation, lower taxes, less immigration, and higher tariffs could benefit certain sectors and industries, with important implications for inflation and bond yields. In the U.S., sectors like banks and cryptocurrencies have surged in response to Trump's policies. However, the impact on European markets has been less pronounced, with the Euro Stoxx 50 and FTSE 100 showing limited movement.



Hungary, however, has felt the jolt of the "Trump trade." As Trump's re-election prospects rose, investors bet on sectors that could benefit from his policies, such as financials and energy. Hungary's cheap and low-regulation environment has attracted investment, with key sectors including manufacturing, finance, and energy. The Hungarian forint depreciated against the euro, reaching a 4-year low in July 2024, as investors anticipated lower taxes and less regulation, boosting risk assets and weakening safe-haven currencies like the forint.



The "Trump trade" could have significant impacts on Hungarian exports and imports. Trump's trade policies, such as tariffs and renegotiation of trade agreements, could disrupt traditional export markets for Hungary, particularly in the automotive and machinery sectors. However, Hungary's strong ties with the EU could mitigate these effects. Additionally, Trump's focus on infrastructure investment could boost demand for Hungarian construction materials and machinery.

The "Trump trade" could potentially boost foreign direct investment (FDI) in Hungary, as investors anticipate lower taxes and less regulation under a Trump presidency. However, Hungary's cheap labor and strategic location in Europe also attract FDI. The impact of the "Trump trade" on FDI in Hungary may be limited, as other factors like EU integration and regional stability play a significant role in investment decisions.

In conclusion, the "Trump trade" is not just an American phenomenon; it's spreading to Europe, with Hungary's cheap market feeling the jolt. As Trump's re-election prospects rise, investors are betting on sectors that could benefit from his policies, such as financials and energy. However, European political dynamics add complexity, with Hungary's right-wing government sharing Trump's anti-immigration stance and implementing similar policies. The "Trump trade" has the potential to reshape European markets, with Hungary at the forefront of this transformation.