Coronavirus – pro-government companies can profit from the crisis

György Matolcsy, the president of the National Bank of Hungary, said that because of the coronavirus, a multitude of companies that were in the hands of foreign investors before can go into the ownership of Hungarian entrepreneurs. He thinks that this will be an important opportunity for the Hungarian economy in the 2020s.

According to G7, it is a global trend that many companies become devalued and as a consequence become a target for investor groups capable of easily moving huge amounts of money. In Hungary, the latter group consists of entrepreneurs who acquired their fortune with the help of the many public procurement programs they had access to thanks to the government’s decisions. 

Interestingly, the idea of bringing key companies into Hungarian hands is not new at all in the country. 10 years ago, PM Viktor Orbán said that in four sectors (energetics, media, retail trade, and banks),

he would like to create a Hungarian majority among the owners.

According to G7, the project was successful. The only exception is the retail sector where Hungarian companies could not beat German ones, so in that area, the Hungarian market share decreased.

That trend will not change because of the economic crisis caused by the coronavirus epidemic, so probably nobody will be able to buy anything in that sector. This is true even if we take into consideration that thanks to a government decision,

the retail sector will have to pay 36 billion HUF (EUR 102M) into the state budget as an extra solidarity tax.

The same is true for other sectors as well because foreign governments will not let big multinational companies fall into the abyss of the crisis. Therefore, G7 expects that principally small and medium companies will get in trouble, so Hungarians will be able to buy Hungarian companies.

This is because the Hungarian government will not be able to rescue every Hungarian company, so those who have a stronger background can start buying the weaker ones struggling with financial problems. 30-40 pc of Hungarian companies do not have enough money saved to pay their employees for months at least. However, there is another category which gained huge profits in the last few years, and in that group,

pro-government enterprises are significantly overrepresented.

This is obvious in the construction sector. The Mészáros and Mészáros Ltd., owned by PM Orbán’s close friend and businessman, Lőrinc Mészáros, has a reserve worth more than 60 billion HUF (EUR 170 million), but other companies owned by pro-government businessmen (Duna Aszfalt, Magyar Építő, West Hungária Bau, R-Kord Ltd.) are also well-prepared to buy other companies. For example, Mészáros’s stock exchange company, the Opus Nyrt., has declared in its strategy that one of its goals is to buy other companies.

It is unlikely that they are going to buy companies in the construction sector, but

it is possible that they will do so in the hotel and catering sector

because many market players struggle with financial problems. Moreover, without proper help from the state, these companies will disappear. However, there are some Hungarian companies owned by pro-government businessmen, like the Hunguest Hotels (Lőrinc Mészáros), which have money to buy other players in the sector.

Furthermore,

even the Hungarian state can appear among the owners of some private companies

in return for the financial help it gives. Andrea Bártfai-Máger, Minister without Portfolio for the Development of Public Assets, for example, referred to this possibility in one of her interviews, saying that it is in the national interest to buy companies that have a vulnerable position in supply chains.

Source: g7.hu