First Romanian stock index abroad

A Romanian stock index will be listed on Vienna Stock Exchange as of next year as part of a collaboration programme between the Bucharest Stock Exchange (BSE) and the Austrian capital market, according to market sources. The Vienna Stock Exchange and the BSE are currently discussing a collaboration memorandum which will most likely be signed by the middle of this month.

The Vienna Stock Exchange could have computed and traded an index of Romanian stock without the agreement of the Bucharest market, but BSE representatives preferred that the new index be traded on the basis of a collaboration agreement, sources say.

Stock indices take into account the values of several shares on one or several markets, providing investors with a market overview.

The possibility of trading in an index offers investors a simple way of diversifying their portfolio and thereby reducing risk.

The new index will be the only option for foreign investors speculating on Romanian companies without bringing money to Romania. In the last ten years, several Romanian companies, like Banca Turco-Romana (The Turkish-Romanian Bank) and furniture producer Elvila, have had their stock listed on a foreign capital market, but currently there are no Romanian shares or indices listed on foreign markets.

The memorandum also stipulates the inclusion of the Romanian capital market within an index calculated by the Austrian stock market for Central and Eastern Europe. This is the CECE Index, which currently includes the most representative companies on the capital markets of Hungary, the Czech Republic and Poland.

Globally, there are several thousand stock indices.

The best-known indices worldwide include the Dow Jones Industrial Average of the New York Stock Exchange, the FTSE-100 of the London Stock Market and the DAX of the Frankfurt Stock Exchange.

The Romanian capital market index that is to be listed in Vienna will be different from the three official market indices – the BET, BET-C and BET-FI – and will include the most representative 6-7 companies listed in Bucharest, including Petrom, BRD and Banca Transilvania. Besides being traded on the Vienna Stock Exchange in the form of futures, the same index is likely to be traded on the BSE after the start of derivatives trading on the market next year.

In recent years, foreign investors have become increasingly interested in the Romanian capital market due to the growth potential of the Romanian economy.