The Stock Exchange has started to shake the portfolios of investors on the market with increasing ferocity, with rises and falls of 5% from one day to another occurring more and more often on the market.
The privatisation of Banca Comerciala Romana; the termination of the agreement with the International Monetary Fund; the publication of the monitoring report of the European Commission; signals for some investors to cash in on their profits; the severe decline of the markets in the region; and the new scandals involving Dinu Patriciu, the chairman of the Rompetrol Group – all these have been reasons for the heavy fluctuations on the market.
Yesterday was one of the good days as far as investors were concerned, with rises of up 7% for the financial investment companies (SIF) and gains of up to 5% for some of the listed companies.
The strong increases yesterday came after a week of constant decline on the market, during which many stocks shed around 10% of their value, and a growing number of investors had started to contemplate selling, to avoid more serious losses.
Many brokers are now saying that the market is becoming increasingly unpredictable, and that the trends are no longer tied to developments on the market. “I don”t know why it went up today. Maybe you can tell me why it”s been going down for a week now,” one broker joked yesterday.
The confirmation of a valuation of about 5bn euros for BCR was followed by a slump for the entire market, which was particularly true for SIFs, after the estimates made by analysts in early October had induced a 20% rise in the SIF stocks over three weeks. Similarly, the monitoring report of the European Commission, which indicated moderate optimism regarding EU integration in 2007 and exceeded initial expectations, was followed by decline on the market.
The termination of the arrangement with the IMF caused a new decline, yet this took place on a day when most foreign fund managers were on holiday. Yesterday, when foreigners trading on the market came back to work, a reversal of the trend was witnessed.
The Bucharest Stock Exchange had previously fluctuated heavily in the first part of this year, due to investors attempting to speculate as best as they could on the upward trend on the market at the time. Things cooled down once the summer came, and now the heavy fluctuations are back.
“It is not about a trend reversal. I think it may have been about an attempt to destabilise the market. There are quite a lot of good stocks to buy in view of the medium term, and SIFs are amongst them,” the trading director of one of the leading securities firms on the market said yesterday.
Some of the analysts on the market say the larger fluctuations actually mean a high risk. If this is so, then the best thing investors can do is sit and wait.
“I have neither bought nor sold anything over the last few days. We are sitting and waiting for things to cool down,” said the manager of an investment fund with significant amounts of money invested on the Stock Exchange.
vlad.nicolaescu@zf.ro