Raising of holding cap sends SIF shares soaring on Stock Exchange

Investors rushed to buy shares in the financial investment companies (SIFs) on the Bucharest Stock Exchange yesterday, the first day when they were allowed to buy more than 0.1% in any of the SIFs. SIF share prices exceeded their all time highs reached in February, ending the day with an average increase of 11%.

The lifting of the holding cap for SIFs from 0.1% to 1% became reality yesterday, after the modification to the restrictions for the acquisition of shares in the Bucharest Stock Exchange trading system was performed. The government had adopted an ordinance mid last month obliging SIFs to raise the holding threshold to 1%.

Stock market investors have been requesting that the SIF holding cap be raised for many years, because a higher threshold would allow foreign investment funds to buy into these companies. Stakes of 0.1% were too small for investors as large as foreign investment funds.

After seeing increases of up to 13% at the start of the trading session, the SIFs ended the day with somewhat different results. The main winners were SIF Oltenia and SIF Moldova, both of which closed at the maximum possible prices achievable through trading, nearly 15% more than in the previous session. SIF Oltenia closed at 1.78 RON/share, while the last transaction with SIF Moldova shares was performed at 1.52 RON/share.

SIF Muntenia and SIF Transilvania ended the day with increases of around 10%, reaching 1.13 RON/share and 1.62 RON/share respectively. SIF Banat-Crisana closed 5.6% up amid a higher prominence of sellers on the market. SIF Banat-Crisana were the most traded on the market, with a volume of 11 million euros.

Yesterday''s rises for the SIFs were generated by speculators, who were buying in the hope of selling at higher prices within a short interval. Buy orders for millions of shares were also placed, indicating that the first funds have started amassing SIF shares to be able to buy as cheap as possible.

"This is a moment everyone has been waiting for for years. SIFs are now becoming for foreign investors just like shares issued by banks or petroleum companies, since they are liquid and can be bought in large stakes. I believe more than half of the stocks traded on the market were purchased by foreign investors," the head of operations of a foreign-held brokerage firm explained.

Yesterday''s transactions amounted to 35 million euros, which saw 2-3% in each SIF changing hands. The total market value of the SIFs went up by nearly 140 million euros to 1.34bn euros.

Brokers say that from now on, the SIFs will no longer see similar trends such as they saw since their listing on the Bucharest Stock Exchange. This is because foreign investors will now look more closely at the portfolio of each individual SIF.

The money attracted by the SIFs to the Bucharest Stock Exchange was also directed to shares in other companies listed on the market, with the indexes that gauge the performance of other listed companies witnessing growth of around 1% by the end of yesterday''s trading session. This meant that the value of transactions on the stock exchange reached a peak for this year at more than 43 million euros.