The Bucharest Stock Exchange felt the second wave of decline that hit the international capital markets yesterday. The BET index lost 5.2%, a decline exceeded only by the decline of the stock market in Russia out of the whole of Europe. Investors sold their shares without looking at prices and brokers were unable to temper the decline.
The correction of the main Bucharest Stock Exchange index exceeded even 6% throughout the trading session and the higher than usual traded volumes indicate that the sellers must have been mainly foreign investors.
Petrom shares shed 6.1%, with the market capitalisation of the company shrinking by 580 million euros in a single day, while BRD-SocGen shares fell 5.2% and the bank lost 225 million euros of its capitalisation. The capitalisation of the entire market decreased by more than 1.3 billion euros.
Such daily corrections of the BET index are generally quite rare on the Bucharest Stock Exchange and usually occur after significant increases. The BET index of the top ten companies on the Stock Exchange exceeded its all time high for a number of times in February. The BET index lost approximately 4.9% last week, due to the overall correction of the international markets that began with the Chinese market.
"The developments on the market in Bucharest remained in line with the international markets. The somewhat more serious decline can be explained by the fact that BSE did not reel from the decline on the international markets so much last week, which witnessed their steepest weekly decline since 2002," explained Mihai Ion, chairman of Raiffeisen Asset Management, which manages two mutual funds that also invest on the foreign capital markets.
He believes the decline on the international markets can be justified by the significant growth over the last few months, when most stock market indices reached all time highs.
"The basics haven't changed and many investors are probably waiting to see where corrections will end, so as to find opportunities to buy," Ion specified.
Yesterday's correction was most seriously felt in the financial sector.
The SIFs, the most traded shares on the Bucharest Stock Exchange, fell by 6.8% on average, after having witnessed corrections by as much as 8% during the day. The market value of the SIFs shrank by more than 160 million euros, while the SIFs lost 9.2% last week.
"Selling occurred by placing orders on the market and I think we are experiencing the same behaviour as in April-June last year, when the SIFs in particular plummeted. I think the major investors are trying to pull the market down and create panic; in an attempt to buy cheaper afterwards, considering there is no fundamental information to justify such sharp declines," believes Laurentiu Floroiu, EFG Eurobank Securities' trading manager.
Compared with the peak in the first session of the year, the BET-FI has lost about 22%, 16% of which was over the last four sessions.
The BET index in turn lost about 11% from the peak it reached a week ago, decreasing to last year's level.
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