The Bucharest Stock Exchange (BSE) again fell sharply yesterday, dashing the hopes of investors of a rebound on the market any time soon.
The BET index shed over 4%, having increased only 8.5% since the beginning of the year. If the investors that bought shares in previous years, or even at the beginning of this year, are still boasting that they are gaining from their investments, most of the new investors that entered the market during the January and February surge have little reason to rejoice. Compared with this year''s peaks, the BSE dropped almost 30%, entirely wiping out the profits made "on paper" by some investors as a result of the strong upward trend of the last few months.
At the same time, almost 4.5bn euros have evaporated from the stocks in companies that peaked in February, with the total market capitalisation reaching 9.8bn euros.
The only recent occurrence that can be regarded as negative for the market was the decision by the Senate Budget-Finance and Banks Committees to include the modification of the SIF stake cap in a separate normative act.
Brokers, however, believe that the information about SIFs should not normally have lead to an overall market decline. "I don''t see why brokerage firm Broker''s shares, for instance, should fall by 8% because of what was announced about the SIFs. Honestly, I am equally surprised by the decline. There were no negative announcements about the macroeconomic situation, no news of bankruptcy of a SIF or of any other companies; the SIF stake cap has already been discussed, so in effect there are no reasons to explain the decline. Clearly, it was only natural that an adjustment occur after the earlier surge of the market, yet when it came it was almost as heavy as the growth, meaning stabilisation should have been in order now," said Razvan Pasol, the chairman of Intercapital Invest, a brokerage firm.
He says that a vicious circle has formed: there are various factors that caused uncertainty about buying, which in its turn turned the BSE into a seller''s market, with some investors deciding to cash in on their profits, thereby pushing the market down still further and leading to yet more reluctance to buy among investors.
While the start of the sharp decline in March was caused by the reduction in stakes by a number of foreign investment funds focusing on speculations, the nosedive taken by the market was primarily attributable to Romanian investors. "It is true that some investment funds have reduced their positions on capital markets in the region, including Romania, but it was Romanians that pushed the market down further than they should have," he said.
Are foreign investors still selling? "At the moment investment funds are neither selling nor buying. In practice, institutional investors are thinking along the lines of ''why should I buy more of these shares now since many are overvalued based on the peaks of February and are going to fall anyway, when I can sit and wait and buy into the primary IPOs, which should see really important companies like Transelectrica and the two Electricas being listed''," Pasol added.
catalin.ciocan@zf.ro
Pentru alte știri, analize, articole și informații din business în timp real urmărește Ziarul Financiar pe WhatsApp Channels
