Investors are showing rising interest in the futures market of Sibiu, which offers them the possibility of deriving much higher gains than on the stock exchange with smaller investments, due to margin transactions. Nevertheless, related risks are hardly inconsequential.
In the first two months, the Sibiu exchange saw contracts totalling about 275 million euros, higher than the total volume the market posted in 2005 and ten times more than the value registered in the similar period of 2005. The average daily traded volume on the futures market in the first two months of this year amounted to over 6.87 million euros, compared with a daily average of nearly 15 million euros on the Bucharest Stock Exchange (BSE). Towards the end of February, the value of transactions on the Sibiu market reached and even went beyond the level of 10 million euros per day, as investors were increasingly active on this market amid the rising volatility of the spot market. Escalating volatility favours speculations, with 2-3% oscillations of the shares on the Bucharest Stock Exchange generating yields of 20-30% on the futures market.
The market in Sibiu is a place for trading futures and options contracts whose underlying assets are stocks listed on the Bucharest Stock Exchange or the exchange rate. Yet, it can also host both speculative transactions and arbitrage or hedging operations, involving transactions both on the spot, and on the futures market. For instance, investors could on Monday buy derivatives of Petrom shares due in March at a price of 0.6209 RON/share, or maturing in June at 0.625 RON/share. On the Stock Exchange, Petrom shares were on Monday quoted at 0.625 RON/share.
Sibiu Monetary-Financial and Commodities Exchange (BMFMS) saw new record highs in February, when the value of sealed contracts came to about 150 million euros, accounting for more than 50% in the traded volume the Bucharest Stock Exchange registered last month.
"Romanian investors'' high interest in investments on the futures market is primarily due to the much smaller costs compared with the Stock Exchange. Practically, the 10% margin allows investors to derive gains similar to those on the Bucharest Stock Exchange with a ten time smaller investment. It is true that if the same sum is invested on the Bucharest Stock Exchange and the futures market, risks are higher on the latter market, but if one invests on the futures market only 15% of the sum invested on the Bucharest Stock Exchange, risks are about the same," stated Teodor Ancuta, chairman of the Sibiu Exchange.
The higher risks do not seem to scare investors away, considering they have been rushing to invest in Sibiu over recent months. Most of them are speculators, but at the same time there is an increasing number of portfolio investors and investment funds carrying arbitrage and hedging operations in order to remain protected from Stock Exchange oscillations.
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