51% More at the Stock Exchange in 2005

Without reaching the previous records in 2004, the Stock Exchange had qualities worthy of the greatest world rings. Even though, the market efficiency remained in the exceptional area. The Stock Exchange shows all the things the economy and its leaders are capable of.

The companies quoted at the Bucharest Stock Exchange (BVB) have ended last year with a market quotation of more than 15.3 billion euros, 64% more than in 2004. This is the maximum value that the SE has been allowed to emphasize after almost two years since the initiation of the "A Strong Market" Government Program.

THE STOCK EXCHANGE UNIFICATION

There are two great successes of the program: the initiation of the unique SE, by the absorption of the Rasdaq SE, and the increase of the maximum number of shares owned at a FIC (Financial Investment Company) by an investor. 2004 meant increases of 100%, and the 51% increase of the BET coefficient last year is still exceptional, especially if one takes into account all the ups and downs recorded.

The accuracy with which the SE reveals the reality of the Romanian economy is also maximum, even when it refers to its lacks. After some initial public offers for several shares, only three new companies have been quoted, and they are rather small. Even so, we finally have a company of IT&C equipments (Flamingo) listed at the SE as well as a brokerage company (Broker SA). "The great listings regarding the state companies are still to come, even though the first of them should have appeared in 2005", Razvan Pasol, general director of the Intercapital Invest brokerage company, observes and he adds that the "frequent modification of the Fiscal Code and the lack of interest of the Government members in the stabilization of the market" is also a bad thing for the SE. The transactions with the Transelectrica shares are expected to appear in the spring. Transgaz is still looking for the handler to bring the company to the SE, and the great frustration of the brokers, the absence of the state shares, is highly unlikely to be solved this year. Moreover, until now, the Romanian economy hasn’t been able to promote more than 64 companies worthy of the SE demands.

UP IN FRONT

As usual, the shares of the banks and of the oil companies have been the headlines. Titles like BRD, Transilvania Bank (TLV), Petrom (SNP) or the Rompetrol Refinery (RRC) and the FIC especially have attracted the majority of the invested money, and significant parts of the money came from foreign investors. The banking sector is still developing, and the oil sector is wanted all over the world. Moreover, SNP and RRC are successful companies in the entire world. The appurtenance of the first one to OMV, a group which wants profit and the Rompetrol expansion, which includes the acquisition of a great French retail chain, are other aces up the sleeves. The fact that the RRC shares only reached to 18% is cause just by the juridical scandals. In the same time, the increase in the SNP case has been limited at 46% by the campaign that reminded the Austrians that the Romanian crude oil cannot be recorded in Bucharest at the same price in London. Razvan Pasol believes that 2006 will be the year of the oil companies, "if their good results continue, and if the scandals regarding Rompetrol stop".

BROKERS

The investment environment talks about the presence in Romania of several world reputed brokerage houses, like Goldman Sachs, Julius Baer, Pictet Asset Management, BNP Paribas, ING or Raiffeisen. Actually, ING Securities, with transactions of 335 million euros, and Raiffeisen Capital&Investment, with 296 million euros, are the champions of the SE. Without the transactions in December, the foreign investments that just entered the market have been 2.6 times greater last year than in 2004, and the amount of the foreigners’ purchases has been 2.7 times greater.

THE FICS

The shares of the 5 FICs have increased by 2.8 times, which reminded the records of 2004. The increase in the maximum holding threshold and the BCR privatization, where the FIC s hold 30% of the shares, have been special stimulants for them. "The interest in FIC, which is still pretty high, can remain the same in 2006, which would generate increases in the prices", the Intercapital director concludes. As for BRD, Razvan Pasol says that "the prices seem reasonable at present". Moreover, "the BRK shares should confirm, as well as the ones from Flamingo and Impact (IMP), whether the financial results of the companies improve".

Translation by Sorin Balan