The total capitalisation of the Bucharest Stock Exchange has increased some 500 million euros since the beginning of the year as a result of the surge in value of some of the biggest companies listed on the market. The total value of the companies trading on the Stock Exchange reached 5.5 billion euros, following the new all-time highs recorded in the BET and BET-C indexes, which mirror the evolution of listed stocks.
Brokers say this is due to new money coming from foreign investors that significantly raised demand for shares in recent weeks. After six consecutive days of general growth, most brokers admit they had not expected this phenomenon and that the market will not be able to keep up with the pace for long.
The BET index, which follows the progress of the market's top ten companies, climbed 10% since early this month, putting Stock Exchange growth this year at almost 65%. This is also the average size of profits made by foreigners that invested dollars or euros, since the exchange rate kept at a very stable level.
"It was only natural for the market to grow because the dividend period is coming and we've had our share of market decreases. We were expecting Banca Transilvania to go up, though we didn't dream of seeing it surge 12% in one week," said Razvan Pasol, president of Intercapital Invest.
The Stock exchange thus resumed its bullish trend in the past three weeks, after an interval in August and September that brokers put down to lower interest by foreign investors.
The first signs of comeback were evident earlier this month, when the European Commission released its annual country report in which it granted Romania functioning market economy status.
"Each year, it has been foreigners that have pushed the market up. This is visible in the statistics on foreign investment, which show the market stopped growing when money from abroad stopped coming in. It is a good sign, however, that in August and September when no more money came from abroad, Romanian investors were able to support the market and there were no slumps in quotations," said Rares Nilas, head of BT Securities, the brokerage firm owned by Banca Transilvania.
Brokers also identify the banking rate cuts for ROL, which made investment in stocks more interesting, as another factor in the market's recent growth. "I believe that current trading prices also include investor estimates of future rate drops," says Daniel Pocorea, a trader with BRD Securities. In recent years, rate cuts have always coincided with market surges, albeit with some delay.
The growth of the Bucharest Stock Exchange matches the latest macroeconomic data and is very encouraging to investors. "Whichever way we look at it, the macroeconomic situation is favourable, whether we are talking about the country report, rate cuts or economic growth. I believe there is still room for growth, but the pace of growth in the past few days is indeed reason for concern, and which, should it continue, may even pose a threat to market growth," Pocorea concluded.
vlad.nicolaescu@zf.ro
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