East Capital, a Swedish-held investment fund manager, among the biggest foreign investors on the Bucharest Stock Exchange (BSE), is mainly betting on Petrom and Impact shares, according to the company's chairman and founder, Peter Elam Hakansson.
The two funds East Capital has operating on the Bucharest market, East Capital Eastern European Fund and East Capital Balkan Fund, are also betting on SIF growth, but SIFs' weight in the funds' portfolio is low because of the 1% stake ceiling stipulated by law.
East Capital funds' investments currently stand at about 75 million euros out of total assets worth 2.75 billion euros. Though quite substantial in absolute terms, the funds' investments in Romania account for less than 3% in their assets.
Hakansson, who is also involved in the management of the funds, says East Capital funds' investments are quite low because the market is small in terms of liquidity and the number of listed companies.
"We'd have probably invested more in Romania had the stock market been bigger. For instance, in the case of the Eastern European Fund we have an exposure of 1.7% in Romania, one of the largest countries in the region by far, whereas in Lithuania, one of the smallest countries, we have invested 2.4% of our portfolio. On the other hand, share prices in Romania are quite high, but that is precisely because the supply of shares is not sufficient," Peter Elam Hakansson said during an interview with ZF.
He believes the Romanian stock market may seem expensive as a whole by comparison with the other markets in the region, but there are some undervalued stocks, though, in his opinion.
According to the latest data available, the fund owns Petrom shares worth around 17 million euros and a stake of around 7% in Impact Bucharest real estate developer, worth some 11 million euros.
The 1% stakes in each SIF the fund owns are currently worth around 20 million euros.
According to the data reported at the end of last year, the fund also owned stakes worth some 800,000 euros in Rompetrol Rafinare oil company and in Socep Constanta harbour operator.
The fund manager was founded in 1997 and has tried to take advantage of the high yields promised by the emerging markets of Baltic countries, of Eastern Europe and the former Soviet Union, being one of the first investment managers to offer open-end investment funds specialised in European emerging markets.
East Capital funds operate just like the Romanian mutual funds, with investors having the possibility to purchase and repurchase fund units every day.
The company's strategy is to buy stock in companies that are active in economic sectors boasting speedier growth than the overall economy, in Central and East European countries.
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