The shares listed on the Bucharest Stock Exchange (BSE) have been following a more and more visible downward trend for a number of weeks now. Although brokers say there's nothing on the market that could justify such a trend, the increasingly lower stock prices might drive many investors away from the capital market, just as the gains earlier in the year drove them to it.
The BET-C index, which gauges the performance of every stock on the Bucharest Stock Exchange, lost 5% last month, and the financial investment companies (SIF) index, BET-FI, fell 7% during the same interval. The ZF Index, which reflects the performance of the top traded shares on both the BSE and the RASDAQ shed 6% during August.
Compared with the almost 80% increase in stock prices during the first seven months this year, the declines do not seem such a big deal, and most of those who sell are making much more money than they would from banking interest. The accelerated decline in prices came out of the blue at a time when brokers last expected it: the end of August, when investors should have been preparing for the growth most players on the capital market had predicted for this autumn. Most brokers, when asked why the market is going down, blame it on "circumstance"
"This is a much sharper decline than expected. Some investors may be capitalising on their gains over the last few months, but it may also be about a speculative decline," says Valentin Ionescu, head of operations with Euro Invest Vision.
The slump in stock quotes is concurrent with the National Bank's interest rate reduction, which should have made a positive impact on stock prices. Investors, however, have showed no signs they will be rushing to invest in shares, given that the interest they get from banks has remained about the same as six months ago. "NBR's signal is important, but the clients that have money deposited with banks will not move it to the capital market, unless they see a significant reduction in the interest on deposits," Valentin Ionescu says.
He added the interest rate reduction should translate into a growth in share prices by at least several percentage points.
There are no predictable events in sight for the next few weeks that could influence the trend of the shares, given that the last half-year financials for the listed companies came out last week.
The two oil companies listed on the Stock Exchange, Petrom and Rompetrol Rafinare were among the main losers in the last few weeks. Petrom shed 13% in the last month, while the decline in Rompetrol Rafinare's quote, which started in April, now stands at 30%.
The main novelty of the last few months that could have affected the entire market was the increase in dividend tax, though brokers believe its effects should have been minor. "We've seen a number of negative comments on the rise in dividend tax and its negative impact on the capital market, but this is not the case," a broker commented yesterday.
vlad.nicolaescu@zf.ro
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