Bucharest Stock Exchange 2007

Martie 2008

BUCHAREST STOCK EXCHANGE

Through a happy coincidence, the Bucharest Stock Exchange’ (BVB) first year as a market operator in the integrated EU financial market overlapped with the stock exchange 125 anniversary. The moment was celebrated with a series of events which allowed the persons interested in the history and achievements of the Romanian capital market to go through the evolution of the stock exchange step-by-step. This exercise has shown that one of the main vectors in the development of a stock exchange is the international financial climate. This is why it can be said that the BVB 2007 evolution was mainly determined by the change of foreign investors perception regarding the Romanian economy and its growth perspectives. In an international environment favourable for investments, Romania’s integration in the EU and the related change of perspective have rapidly been reflected, even at the beginning of the 2007, by the various segments of the local financial market. In the first semester of the year the national currency continued its up going trend, the interest rate went down and the capital market indices registered new historical records. Regarding the second semester of the year, with international financial markets in a turbulent period, the market volatility grew, the investors’ access to financial resources became difficult, the cost of borrowing increased and decreased the investors’ aversion to risk. The effects were seen also on the Romanian capital market, where the 1^st semester trends stopped.

Therefore, the main feature of the BVB for the 2007 is the increased market sensitivity to what’s happening at global level. Taking into account that the fundaments regarding the Romanian economy have remained solid and that its perspectives have remained positive, the international events were the ones which determined the trends in BVB.

This was ease by the fact that foreign investors became more active on our capital market and have significantly increase their weight in the total market turnover.

What BVB has brought up in 2007 is the way capitalization and turnover evolved on the BVB market segments: regulated market and Rasdaq market. The growth rythm for the Rasdaq market has significantly been higher than the main markets’, which shows that the BVB and Rasdaq fusion has met one of its initial goals of making the Rasdaq issuers more visible. Another explanation for the difference in growth rythm for the two market segments can be given by the increased sofistication of investors and intermediaries, who refined their abilities of analysing the market and the issuers.

In order to respond investors needs and expectations, in 2007 BVB diversified its rage of offered financial instruments. Consequently, in September 2007 it was launched the derivatives market. The first derivatives available for the market participants were futures on BET and BET-FI indices. Above this, at the end of the year BVB launched the allotment rights, which were firstly used for Transgaz. Transgaz IPO was the only BVB’s IPO in 2007, but it offered lots of information about market’s absorbtion capacity. The value of Transgaz share package offered for subscription was of approximatelly EUR 65 mn, with a total demand over passing EUR 1.8 bn. Accordingly to the data presented by the intermediary of Transgaz IPO, the number of investors who demanded buying Transgaz shares was over 12000, three times larger than for Transelectrica’s IPO in 2006. From value point of view, the largest amounts dedicated for buying Transgaz shares were owned by institutional investors: EUR 1.5 bn were quoted, equivalent to 60% of the total number of shares offered, and 39 times larger than the offer.

Even though in 2007 BVB had only one IPO, the investors’ interest in buying shares of the listed companies has increased. This explains the large number of share capital increases, which brought a substantial amount in the growth of market capitalization.

The total market capitalization for the two BVB market segments (regulated market and Rasdaq market) overpasses in 2007 the amount of RON 100 bn, with an end of year value of RON 110 bn, 31% higher that the end of year value for 2006. 78% of the market capitalization was concentrated by the 59 companies listed on the regulated market, and the rest of 22% by the capitalization of the aproximatelly 2000 companies listed on Rasdaq market.

Taking into account the market dynamics, the market value of the companies listed on Rasdaq market (+128%) has increased more rapidly than for the companies of the regulated market (+17%).

The turnover for 2007 was aproximatelly RON 18 bn, 70% higher than the value registered in 2006. The daily turnover was of RON 55.2 mn for the regulated market and RON 17 mn for the Rasdaq market. Like the capitalization growth rythm, the turnover grew faster on the Rasdaq market (by 500%) than on the regulated market (by 40%).

As a trading feature of 2007, it can be mentioned that the sesonality pattern of the recent years didn’t mentained. This time the maximum of the turnover for the regulated market was registered during May-August period.

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