FINANCE
Written by
Published on April 21, 2017
The Bucharest Stock Exchange has started the year on a promising note
In the first quarter of 2017, the value of transactions on the regulated market of the Bucharest Stock Exchange (BVB) climbed to a six-year high and reached €530 million while the number of transactions and traded volumes climbed to a seven-year high. Ludwik Sobolewski, CEO of the BVB, spoke to Andrew Wrobel, about the effects that could positively influence the country once it gains Emerging Market status, and the increased interest shown by private companies to be listed on the stock exchange. The last two quarters seem to be very promising for the Bucharest Stock Exchange. Indeed, the first quarter was very good but it started at the end of last year. First of all, in September 2016, Romania was put on the so called “watch list” for Emerging Market status by FTSE Russell, because of the progress it has made on modernising the capital market. Romania currently has the status of a frontier market and we would like to be upgraded to be among the emerging markets. Secondly, we witnessed a very big transaction on the market: one of the largest companies, listed in Bucharest, sold a significant stake in OMV Petrom, another big company that is listed on the exchange. The market showed a good appetite and good strength, and this transaction was completed within a couple of hours, with a value of around €150 million. Finally in December, we had an IPO of MedLife, a company operating in the healthcare sector. The value of the transaction was €50 million and it was the largest ever IPO of a private company (non-privatisation linked to) in the Romanian stock market. All of these events showed that the market is really evolving in a very
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good direction. We had rather better liquidity at the end of 2016 and it has continued throughout January, February and March. When we counted the number of transactions and the value traded, we saw that this is the best quarter we have had for the last six or seven years. A big challenge for the Romanian capital market has always been characterised by the assets list which is undervalued. So, we are very happy to see that during these last three months, prices are going up and it has nothing to do with a superficial euphoria. It looks like a process with a certain thriving activity. It turned out that, when we look at index performances, Bucharest is the best in the entire region and one of the best in Europe. This is also partly because in 2015 and in 2016 we had the highest dividend yield in the world. Let’s briefly circle back to the upgrade to emerging capital market status. What would this upgrade entail? We will have larger flows of capital investing in Romanian stocks, equities and also other instruments. This is taking into consideration the fact that the size of the firms that invest globally in emerging markets is much larger than the size of the firms which specialise in frontier markets. The Emerging Market status help us to be better perceived than a frontier one, where the level of risk commonly associated with this type of market is higher. But it will also be translated into larger flows and we think that this will provoke a chain reaction, allowing us to have get flows coming from all sources, domestic and from abroad. Then, it will incentivise more retail investors. They will be more willing to invest money because they will see the market growing, with growing
Bucharest Stock Exchange (source: BVB)
ANDREW WROBEL