The stocks of BRD and Petrom, the largest companies listed on the Bucharest Stock Exchange, yesterday plunged 11.6% and 9.6% respectively.
The reason for this slump remains unclear, but many brokers were left speechless before investors started to enquire why the market was going down. There is talk on the market of a lack of confidence on the part of investors, be they Romanian or foreign, who prefer to no longer buy, rather than investors selling out of panic. Petrom and BRD dragged the whole market down, which lost 1.5 billion euros of its capitalisation.
The main index of the market, BET, fell 7%, despite sales of shares of only 14 million euros on the market, which isn''t much for a hectic market day. Yesterday''s decline was even more surprising considering the other markets in the region gave the impression that they were beginning to rebound. Markets in Poland and Hungary achieved 2% growth yesterday afternoon, while the Russian market went up by 8% helped by the rise in the oil quote, and the Czech market witnessed a 1.2% decline.
In addition, according to the data supplied by the management of the Stock Exchange at the request of ZIARUL FINANCIAR, foreign investors, who are usually the trendsetters on the market, made net investments (buys minus sales) of 9.2 million euros between May 1 and 22, more than in April, when the market had a stable performance.
Petrom concluded the day at 0.4410 RON/share, after having constantly decreased throughout the day and reached a 0.44 RON/share low right before close. A total of 925 million euros vanished from the accounts of Petrom''s shareholders yesterday alone. The transactions whereby shares of the petroleum company were sold yesterday were worth 1.4 million euros. The sale of such stake in Petrom would have been an easy job for a broker in a regular trading day and would not have caused the quote to sink.
The strong downward trend started with BRD''s shares, which had lost 6% one and a half hours into the trading session and ended the day at 15 RON. BRD''s quote has lost over one quarter of its value since the all time high reached in February.
"I think we are dealing with the reluctance of the foreign investors towards the emerging markets, which was also compounded by the lack of confidence of the Romanian investors generated by the taxation changes and by the company delisting process," says Stere Farmache, Bucharest Stock Exchange manager. The number of Romanian investors that are active on the Stock Exchange has gone down to less than half last month compared with the start of the year, reaching approximately 5,700 investors from about 12,500 in January.
The low tax of 1% on the gains made from shares held for more than one year could be eliminated next year according to the fiscal code draft, which could make long-term investors sell to cash in on their profits.
