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Hungary's equity index sank more than 20 percent from its 2010 peak and government bonds also dropped as a surprise interest-rate hike raised the benchmark two-week deposit rate to 5.5 percent from a record-low 5.25 percent.
There's also nasty politics involved in the sinking market as the government wants central bank President Andras Simor (pictured) to resign and to strip him of the right to nominate rate-setters, giving parliament the power to select future policy makers.
“Hungary is looking increasingly worrying, with the National Bank of Hungary and the government at each others' throats at the moment, just when global market conditions are looking very difficult,” wrote researcher Timothy Ash. “These two institutions need to be pulling together at these difficult times, not against one another.”
“What’s happening in the euro zone is making eastern Europe very troubled,” summed-up analyst Koon Chow.
