Good old times seem to be back at the Bucharest Stock Exchange

Perhaps for the first time since 1997, which has been the best year for the Bucharest Stock Exchange (BSE) so far, brokers are beginning to feel like tables are finally turning.

For the past months, the blue chips on the Stock Exchange have seen their price take a steady increasing trend, bringing very high gains to investors. This kind of profit exceeds by far banking interest rates, the increase in the ROL/USD exchange rate or the yield of T-bills.

“There will be more and more talk about the Stock Exchange,” says Adrian Caramiha, a trader with brokerage company Creditanstalt Investmentbank Securities Romania.

While all shares were soaring back in 1997, investors are much more selective now. Practically, all the money goes towards top stocks, which are backed by excellent financial results and a solid economic situation. BET, the main stock exchange index, is close to the level of 800 points, which was last “seen” on May 4, 1998.

While Alro’s fifteen minutes of fame are over, investors are now focusing on Banca Transilvania, Banca Romana pentru Dezvoltare (Romanian Development Bank), the five SIFs (Financial Investment Companies), Antibiotice, Terapia or Compa.

SIF shares have been going up for several weeks, as their price has tripled as compared to the beginning of the year. Banks have soared 60 percent over the past two months and this trend is likely to keep up.

If deponents had chosen not to place their money in a bank to get the interest rate and decided to purchase bank shares instead, they would have gained two years’ worth in only a couple of months.

“This is a good sign and the market is going back to what it used to be in 1997. Foreign investment funds had just entered the Romanian market back then and they were buying both on the Stock Exchange and on Rasdaq. The entire market was growing.

There was no 15% limit and what one bought one day could be easily sold the next day, thus deriving profit of 25-30 percent. I do not know if foreign investment funds are acting on the stock exchange now,” said Mihai Grigore, trader with Eco Invest BRD.

Before trying to find a financial explanation for this evolution, capital market operators are grounding the increase on restructuring measures taken by the Stock Exchange management. Moreover, brokers also think that money which used to be invested in Alro is now headed towards other shares.

“I believe that the Stock Exchange is doing so well also due to restructuring measures taken lately, which led to higher quality of the remaining companies. If the domestic currency finds its balance and macroeconomic indicators keep improving, I think that the Stock Exchange could go back to its times of glory,” BSE general manager Stere Farsmache told Ziarul Financiar.