Number of shares issued
The following graph shows the evolution of the number of shares listed on the stock exchange between 1864 and 1913. At the opening, 13 shares started trading, which increased to 174 in 1913. It can be seen that the increase was not linear, with several periods of rapid growth, usually followed by some decline - these cycles are linked to the cycles of stock prices (usually a significant price increase followed by an increase in the number of listings).
The first rapid increase was in 1867-73, when the number of shares rose from 27 to 115. The period was characterised by economic euphoria after the Reunification, which was interrupted by the international stock market crisis of 1873.
The second rapid increase was seen in the period 1890-95, with the number of shares rising from 93 to 158 during this period. The period began with the introduction of the Crown and ended with the Millennium Exhibition of 1896.
The third period of growth can be seen in 1906-11, when the number of shares rose from 138 to 178, the highest level in the dualist era.
Sectoral distribution
There are also interesting periods in the sectoral distribution of equities. The stock exchange initially classified shares in 6 sectors (banks, savings banks, insurance companies, steam mills, transport companies, miscellaneous companies), to which it added 3 more sectors in 1894 (mines and brickworks, printing works, ironworks and machine works). The shares in the 3 new sectors were previously included in miscellaneous companies.
Initially, the three financial sectors were the most important (accounting for almost half of the shares), but by 1870, thanks to other introductions, the total weight of the financial sectors had fallen to 30%. This began to fall again in the wake of the stock market crash and subsequent bank failures, and by 1894 had recovered to around 30%, where it remained for the rest of the period.
Steam mills were the hit industry of the 1864-70 period, almost reaching 25% of shares by 1870. Their share then gradually declined to around 6% by 1894, and remained there until the First World War.
Between 1870 and 1885, the fastest growing sector was transport companies, including railways. Although the railways were nationalised continuously from 1876 to 1891, many shares remained on the stock exchange after nationalisation as a liability of the Royal Hungarian State Railways, and functioned effectively as state annuity bonds.
Finally, the period 1890-95 saw an increase in the share of industrial companies, which led to the creation of new sectors on the stock exchange.
Ratio of capitalisation to GDP
Interestingly, the cycles that appear in the ratio of capitalisation to GDP are less visible in the number of shares, but rather in the steady growth.
Data on capitalisation are only available from 1874, as the first Hungarian Compass was published in 1875. In 1877, several shares with significant capitalisation, already listed on the Vienna Stock Exchange, were listed on the Hungarian stock exchange (Déli Vasút, Kassa-Oderberg Railway, First Imperial and Royal Danube Steamship Company, Austrian Credit Institute, Austrian-Hungarian State Railway). These were classified as foreign shares, despite the fact that most of their activities extended to Hungary. For this reason, we have plotted two curves: in blue we have indicated the proportion that includes these shares and in yellow the proportion that does not.
The capitalization ratio of domestic shares alone increases from 3.3% in 1874 to 25.4% in 1913, at an almost constant rate. The ratio of capitalisation to foreign shares reaches 40% as early as 1894, and remains roughly unchanged thereafter, closing at 37.7% in 1913. The proportion of domestic shares in the capitalisation has thus been steadily increasing.
"What is needed is a serious, persistent will on the part of each of us, directed to visit, use and animate the young institution frequently, perhaps at first with some sacrifice of our habits, our desires and our interests."
Baron Frigyes Kochmeister (1816-1907)
President of the BSE (1864-1900)"As regards freedom of action, our institution desires nothing more than to do what is in the interest of the country as a whole, and to be free from any unilateral tendency, as it has been far from seeking to cultivate its own interests at the expense of the common good. "
Baron Zsigmond Kornfeld (1852-1909)
President of the BSE (1900-1909)"Our poor mother, this dismembered Hungary is sick, seriously sick, and let us put aside all other interests, real or apparent, and keep in mind the only point of view: what is necessary, what is good for our poor, sick mother: Hungary."