Foreign investment in Stock Exchange continues apace

Foreign investments in the Stock Exchange are likely to double this year in comparison to last year, as happened in 2003 against 2002. This trend was manifest in the first half of this year and looks set to similarly continue during the second half. Net foreign investments in stock (the value of acquired stock minus the value of stock sold by foreigners) in the first six months of this year totaled 24.1 million euros, as compared to 21.5 million euros in the whole of 2003. In 2002, net foreign investment reached 12.3 million euros.

In the last two months, foreign investment on the bourse has been boosted by the floating of stock in Rompetrol Rafinare (Petromidia), with several foreign investment funds and companies registered in tax havens joining the company’s shareholder structure. Over the last two months, after stock in Rompetrol Rafinare started being traded on the bourse, net foreign investments amounted to 11.5 million euros. According to brokers, foreign investments are largely oriented toward stock in a number of large companies, such as banks, oil companies and more recently, SIFs.

Having seen the majority of listed stocks increase by over 50% this year, foreigners did not step back from making investments. “We haven’t witnessed any significant drop in the number of foreign investors once prices rose on the bourse,” says Valerian Ionescu, operations director with CA IB Securities, the brokerage owned by HVB Bank.

In the wake of 10 new member states joining the European Union on May 1st, analysts say that the Romanian and Bulgarian markets have climbed to the top of those markets perceived by foreign investors as having the highest potential. Over the last few months, several funds have redirected their portfolio investments from the Czech Republic and Hungary toward Romania and Bulgaria.

“Investments on the Bucharest Stock Exchange continue to be quite attractive for foreign investors since they are currently seeking to involve themselves with currencies such as the ROL,” says Valerian Ionescu. Beside the bourse potential, foreigners are also attracted by high ROL-denominated interest rates as compared to the rates available on international markets. The stability of the ROL exchange rate is making for extremely profitable monetary yields.

Nevertheless, Romanian speculators have become more active in the first half of this year, thus diminishing the importance of foreign investors in relation to the total value of transactions concluded on the market.

vlad.nicolaescu@zf.ro