Foreign funds haven't spent any money on BSE for 7 months

Foreign investors’ activity on the Bucharest Stock Exchange was quite feeble in the first nine months of this year, but brokers expect foreigners to step up their operations in the last quarter, in the wake of the favourable country report.
Investments by non-residents on the BSE in the first nine months of this year registered a positive volume of 73.5 million euros, down 17% compared with the net investments posted in the same period of last year. After the massive capital inflows recorded in the first two months of the year, foreign funds’ operations subsided considerably starting March, when the first significant capital outflows were also registered. Practically, over the past seven months foreign investors sold more than they purchased.
National Securities Commission statistical data on foreign capital inflows and outflows on the Romanian market in the first eight months of this year confirm the weaker activity of foreign investors. During the January-August 2006 period, the sums foreigners placed into brokerages’ accounts were only 3 million euros bigger than the sums they withdrew. Total inflows amounted to 427.6 million euros, while outflows stood at 424.7 million euros.
The decrease in the foreign investors’ activities was registered against a less favourable international backdrop, generated by the migration of speculative capitals from emerging toward developed markets, which overlapped with a series of domestic factors, such as the dispute around financial investment companies and the ordinance on delisting. These instances of legislative uncertainty caused foreign investors to be more cautious.
Moreover, the country report in May, which raised some doubts with regard to the date of Romania’s EU integration, was not quite encouraging for foreign investors.
“The May report sounded an alert as far as foreign investors are concerned, who preferred to wait for the September report to be certain about integration before making a bigger commitment on the market. This is why there were months when foreigners were net sellers,” stated Adrian Simionescu, manager of Finans Securities, Finansbank’s brokerage.
Foreign investors’ activity started to pick up in September amid the clear signals related to a favourable decision for Romania. Last month, foreign investments registered a positive volume of 1.87 million euros, being, however, far from the value of 33 million euros posted in September 2005.
Simionescu considers foreign capital inflows will add up in the following period, but not suddenly, as other investment funds will focus on the Romanian market, but he does not expect any massive capital withdrawals by the funds already on the market.