Like many other European countries, the First World War brought the closure of the stock exchange in Hungary on 27 July 1914, but this did not stop trading. Brokers continued to trade during the war, and share prices rose massively from 1914. By 1918, 7.2 million shares had changed hands.
The galloping inflationary environment that followed the World War pushed stock market turnover to extraordinary heights, only to be halted by the introduction of the new currency, the penguin, in 1925. Apart from a brief period before the New York stock market crash of October 1929, the Hungarian stock market was stagnant. On 14 July 1931, the BSE was closed again due to the German bank closure of the previous day and the financial collapse of most of the continent's banks. Official trading did not begin until April 1932, first in bonds and then in the 18 most traded shares. The boom did not begin until 1934, after the recovery from the crisis, and peaked in 1936.
Hungary's entry into the Second World War triggered an unprecedented rally in the stock market, with heavy industry and military stocks in particular soaring by hundreds of percent. In 1942, the government tightened BSE's statutes, banning private trading in shares, imposing a reporting requirement on share portfolios and capping daily price movements. However, the stock exchange was allowed to operate until the beginning of the siege of Budapest in mid-December 1944.
During the hyperinflation following World War II, there was a lively private trade, a veritable currency and gold exchange, partly in the dilapidated stock exchange building and partly in the surrounding cafés. The stock exchange was officially reopened in August 1946, when the forint was introduced on 1 August. With no payments made on previously issued bonds denominated in crowns and pence, and no dividends paid by joint stock companies because of war losses, the exchange rate fell steadily. Finally, two months after the nationalisation of most of Hungarian industry, on 25 May 1948, the government formally dissolved the Budapest Commodity and Stock Exchange and took its assets, housed in the building on Szabadság Square, into state ownership.
Source: G. Tamás Korányi - Nóra Szeles, Stock Exchange is Born (BSE, Budapest, 2005)
"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."