The total worth of the companies listed on the Bucharest Stock Exchange (BSE) exceeded $4bn last week, for the first time since the market was established. The increasing stock prices, which are already a January tradition, are not joined, however, by new listings. Even so, the transactions operated by brokers are soaring, whereas the average gains logged by investors have exceeded 10% in the first three weeks of the year. Annual interest rates for banking deposits range between 14-20%.
The BSE capitalisation is likely to reach $6.5 billion by yearend, after the stock market merges with the RASDAQ market. Even if the upcoming merger is not considered, the Bucharest Stock Exchange officials are hoping to see an increased value of the listed companies, even compared with the Gross Domestic Product (GDP). "We hope this year will bring a market capitalisation accounting for 7.5% of GDP," says the BSE president Sergiu Oprescu. BSE capitalisation currently accounts for some 7% of the Gross Domestic Product. According to Oprescu, the 7.5% target can be attained by floating new companies, not only by increased market value for the listed companies.
The ratio between the stock market capitalisation and the Gross Domestic Product is one of the most accurate indicators that point to the development of the capital market in a country, and can easily exceed 100% in the advanced economies.
Of all the companies listed on the Bucharest Stock Exchange, the biggest capitalisation is held by SNP (National Oil Company) Petrom - $1.7 billion, Romanian Development Bank (BRD) - with almost one billion dollars, aluminium plant Alro Slatina - 220 million dollars and Banca Transilvania - $160 million. The five financial investment companies (SIFs) are worth 380 million dollars on the market.
BSE's total capitalisation has increased ten times since 2000, whereas last year's transactions ($302m) were worth 3.5 times more than in 2000.
All three official indexes of the Bucharest Stock Exchange peaked to new record-highs almost every day this year. The BET index, which monitors the evolution of the top ten companies has climbed 10.2% since late last year, the market's general index BET-C went up 9.3%, whereas the average growth posted by the financial investment companies (SIFs) reached almost 13 percent.
"This euphoria is specific for the beginning of every year, not only on the Romanian market. On the other hand, the market expects a single-digit inflation rate this year, whereas investors go for those companies that generally distribute dividends and can bring them earnings comparable with inflation only from dividends, without considering capital increases," Sergiu Oprescu says.
The banks' stocks (BRD and Banca Transilvania) have gained 15% since the beginning of the year. Among the SIFs, the best performance was posted by SIF Moldova, which surged 20%, whereas the other four SIFs went up 13-14 percent.
vlad.nicolaescu@zf.ro
