Non-residents stop buying

Foreign investment on the Bucharest Stock Exchange (the difference between purchases and sales) was negative in April for the second month in a row. Brokers say foreign investors, who usually drive the market up, have stopped buying pending clarifications of how the capital gains tax will be applied. Last month non-residents took out only 2.2 million euros, less than in March when the outflows reached 13.7 million euros. “Many foreign investors are waiting to see what will happen with the legislative modifications pertaining to capital gains tax because many of them will be affected,” said Octavian Dragolea, manager of the European Securities, a brokerage firm. Although yet to come into force, the new legislation on the taxation of share transactions has been changed repeatedly and enforcement pushed back twice, generating uncertainty on the market. The lower level of foreign capital outflows brought with it a smaller decline in prices. The BET index, which monitors the top ten listed companies on the market, lost 7.4% compared with the 16% seen in March. ZF