BSE to resume growth this autumn at the earliest

The main analysts on the market maintain that the stock exchange correction period has not come to an end, and the market is likely to suffer new short-term slumps, but they believe the stock exchange would resume its upward and market indices will grow to “significantly higher” levels by the end of 2006.

The stock exchange has witnessed dramatic corrections over the past months, which has pushed many of the main shares on the market to prices brokers and analysts regard as increasingly attractive. Since the beginning of the year, SIFs have lost about 25%, while the BET benchmark index is close to zero. “For 1-2 months, generally coinciding with the vacation of most institutional investors, we are expecting a relatively calm period,” says Adriana Marin, manager of the research department of BRD Securities. She specified that the drastic collapse of the Romanian Stock Exchange was felt universally and occurred in all global markets, especially emerging ones, which suffered considerable decreases, due to the investment funds switching to fixed-income instruments in the wake of euro and dollar interest rate increases.

Recent global events were in the case of the Romanian market aggravated by specific factors, such as the lack of clarity in the Fiscal Code draft regarding taxation of capital earnings, political instability, and in the case of SIFs, uncertainty pertaining to the future regulations of CNVM (National Securities Commission) on the 1% threshold.

Raiffeisen Capital & Investment analysts in turn say the recent advancement of the market is influenced by investors” unfavourable perception, globally, on investments in stocks, which is generated by fears related to the uninterrupted growth of interest rates, both in the United States, and in Europe. Yet, they expect that the following weeks will be again dominated by strong fluctuations.

Managers of some foreign investment funds present on the Romanian market say that the correction period is about to end.

Both market analysts, and the managers of some foreign funds expect the market to resume its upward trend by the end of this year, with SIFs most often being considered as the first stocks to revert to growth.

Adriana Marin believes the market may recover starting this autumn as it can be buoyed by a possible high interest of investors in the offering of Transelectrica, as well as by a country report confirming the date of January 1st, 2007 as the moment Romania joins the EU.

BRD Securities analysts consider that “positive trends should be witnessed in particular by Petrom, SIFs, banks, and in the case of Antibiotice, the privatisation announcement is likely to have a catalytic effect. Losers would primarily include Rompetrol Rafinare, as the high prices of oil are not helping them”. catalin.ciocan@zf.ro