The instruction by the National Securities Commission (CNVM) to the financial investment companies (SIFs) to remove the holding limits in the statutes caused prices in these companies on the stock exchange to hit the roof on Monday. The market value of the five SIFs climbed by over 130 billion euros to 1.2 billion euros. Since the beginning of the year, the SIFs have risen by almost 80%.
At beginning of the trading session, investors rushed to buy SIF stock at prices up to 15% higher than last week in the hope of even higher prices to come. By the end of the day, average prices for the SIFs in comparison with previous levels had increased by nearly 11%. Brokers claim to have been expecting these developments, especially since SIF prices have surged every time the issue of the holding ceiling has come into discussion in the past.
"The strong SIF growth was clearly to be expected following the CNVM decision on the holding limit. For the time being, however, it is not quite clear how this is going to happen," says Rares Nilas, manager of BT Securities brokerage firm. The most traded shares on the market on Monday were those of SIF Oltenia, which climbed by 10.3% to 16,000 ROL per share, and SIF Transilvania reached 18,000 ROL per share in an 11% increase. A similar increase was enjoyed by SIF Banat-Crisana, which closed the trading session at 14,800 ROL, while SIF Moldova climbed 10.3% to 13,900 ROL. SIF Muntenia closed at 10,100 ROL, 11% higher.
The trading of SIF stock was suspended in the middle of Thursday's session, following publication by the CNVM of an instruction to the SIF managements to remove the holding limits from their statutes. Currently, the statute of each SIF forbids shareholders from owning more than 0.1% in its stock. SIF representatives, however, have said that the CNVM cannot force them to take this step. The chairman of the Senate budget-finances committee, Varujan Vosganian, has scheduled a discussion with the SIF managements for today to discuss a possible amendment to the capital market law in respect of this issue.
Investors are relying on the elimination or raising of the holding limit to attract more buyers of SIF stock. "If the limit is eliminated then SIFs are expected to become attractive to more investors, generating more pressure to buy. This would also enable tighter control of the management by shareholders," explained Valentin Ionescu, operations manager with Euro Invest Vision.
The overall level of the stock market on Monday reached new historical peaks, with the BET index, which follows the most important listed stock, exceeding 6,000. The value of transactions on the market was also the highest seen for this year at 932 billion ROL (26 million euros), partly due to the deals in Petrom, Petromidia and BRD stock.
vlad.nicolaescu@zf.ro
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