Three high-profile initial public offerings (IPOs) have had a hugely positive impact on the primary Romanian stock market this year, the Bucharest Stock Exchange (BSE). The BSE’s BET has grown by 20 per cent this year, while liquidity through the first nine months of 2017 has improved by 33 per cent compared to the same period last year.
The IPOs, for AAGES (which designs and manufactures induction heating machines), Sphera (which operates Pizza Hut, KFC, Taco Bell and a number of other food and drink franchises in Romania) and Transilvania Insurance Broker were worth a total of 300 million lei (64.8 million euros). The listing of Digi – a cable television, mobile telephony and internet operator – in May also boosted the BSE.
“Increased liquidity, especially in the second part of 2017, and intensification by the three new IPOs prompted investors to weigh the attractiveness of the Romanian stock market, which is now very close to obtaining the status of emerging market according to MSCI standards,” Leonardo Badea, head of the Romanian Financial Supervision Authority (ASF) told Emerging Europe. “The ASF has focused on the achievement of stock market infrastructure consolidation, pursued the implementation of corporate governance principles for the supervised entities, intensified its efforts to implement risk-based intertwined with on-site supervision, and stimulated capital market intermediaries to participate in preparations for the new MIFIDII requirements.”
According to Mr Badea, political instability and government policies have not had any real impact on investor confidence.
“Market evolution reflects all factors that have an influence on the economy, the perception of local and international investors, the country risks and expected returns and any future prospects,” he said. “Investors may react if they feel that the political framework threatens their portfolios expected results. So far, recent evolutions reflected by improved liquidity showed no major concerns regarding the implementation of government policies.”
The local corporate bonds market has also had a positive year. The BSE accepted corporate bond issues by Vrancart (38.25 million lei), Unicredit Bank (610 million lei), Globalworth Real Estate Investment (550 million lei) and the International Bank of Romania Investments (60 million euros and 300 million lei).
Mr Badea is optimistic that 2018 will be another good year on the BSE. “We will continue with measures aimed at achieving emerging market status, through stimulating the growth of capital market liquidity and providing a regulatory framework according to the highest standards,” he said. “We will also support the development of the bond market as an alternative to financing through the capital markets and encourage the bond issuance by companies already listed on the BSE. We are working to identify sustainable solutions to increase the number of active investors and to further continue the growth of the investment fund industry.”