BVB "general cleaning" comes as a surprise

Bucharest Stock Exchange Committee’s decision to downgrade five companies to the second tier and to suspend other 56 due to lack of financial reports surprised everybody, but most of those involved in market operations admit that these measures were grounded.

“As a participant in capital market operations I can only describe this decision as useful. It may have a good influence on investors, who might become more trustful,” Romanian Investment Fund representative Florin Dolea told Ziarul Financiar. However, Dolea believes that the moment chosen for announcing such a decision was a bad one. “I remember that, in the beginning, stock exchange managers did their best to invite companies to discussions, in order to bring them on the market. Now, I found out about Policolor’s downgrading from the newspapers,” Dolea added.

Romanian Investment Fund, which is administrated by East Fund Management, owns 29.19% of paint and lacquer producer Policolor share capital. The fund invested important sums in Romanian companies, such as Terapia, Policolor, Alro, Imsat, Rolast Pitesti, the Turkish-Romanian Bank (BTR). The value of the fund’s net assets amounts to 31.5 million dollars. Policolor belongs to the group of five companies that have been downgraded by Bucharest Stock Exchange from the first to the second tier, due to lack of net profit during the past two years.

“Rules that have been suddenly applied eliminate financial revenues from net profit, but financial expenses are not excluded. On the other hand, Policolor losses were caused by long-term credit contracted by the company, while current activity results were as healthy as they could be,” Dolea explained.

Romanian Investment Fund representative expressed his trust as far as the future of Policolor was concerned. He hopes that this year the company begins to register profit.

Bucharest Stock Exchange decisions were also generated by its intention to follow the general positive trend determined by Eastern European markets’ growth. Moreover, Stock Exchange decisions might not have a negative impact on companies downgraded from the first tier.

“As far as Dacia is concerned, Renault has already disappointed every possible investor,” Broadhurst Investment Fund manager Andrei Siminel said. “Policolor has been experiencing difficult restructuring for quite a long time and major investors are already aware of this situation. At the same time, Constanta-based shipyard has been working under very difficult conditions for several years now,” Siminel added.

Pitesti-based Automobile Dacia, Policolor and Constanta shipyard have also been excluded from the BET benchmark calculation.