Shares listed on the Bucharest Stock Exchange shed an average of 3% yesterday, representing the largest decline of recent days and highlighting an increasingly clearer downward trend following the over 50% rise in January and February that made players on the market rich. The market has fallen on almost every day of the last two weeks, moving further and further away from the all time highs at which many investors bought in the hope of seeing the market climb even higher.
From the peaks reached at the end of last month, SIFs have lost more than 10% of their value and the BET-C index, which gauges the other shares listed on the market, fell nearly 8%. The market value of all the other listed companies lost 1.13bn euros over the last ten days, reaching 13.1bn euros yesterday.
In the first two months of the year the BET and BET-C indices rose by around 50%, while SIF quotes almost doubled with no explanation on the market as to why. Few brokers would have dared forecast these trends early in the year, despite the cutting of company profit tax to 16%. The increase in share prices was attributed to Romanian company development prospects, while the results published by companies for 2004 did not show general increases in sales or profits.
BET was 38% higher yesterday than earlier in the year, while SIF progress since the beginning of 2005 slowed to 72%.
Brokers have differing opinions as to the future development of the market, with some saying the decline in prices was a natural negative adjustment after the growth of January and February and that the upward trend will continue, while others said the market had gone too far up, being for the most part pulled up by the less experienced investors attracted to the market by the high gains seen in the last few months.
“I believe this year will be the first of the last years when it is possible to lose money on the stock market, particularly because many new investors entered the market and bought at the highest prices reached this year,” says Grigore Chis, trading manager of SSIF Broker, which is based in Cluj-Napoca.
Yesterday was the third consecutive day of decline for stock market indices, yet brokers say they cannot yet tell if the trend will continue.
“The decline in the last few days could be a strategy of the major investors on the market that are letting prices drop so that they can buy again, or maybe it is the start of a downward trend. It is too soon to say which,” said Alin Brendea, head of operations with Prime Transaction.
The main losers yesterday were precisely those that are the biggest companies on the market and get most of their buy orders from foreign investors. Petrom fell 5.7% yesterday to 4,650 ROL per share, while BRD finished the day at 52,500 ROL, down nearly 8%. Both companies lost 13% against the peaks of last month.
The brokers that handled the share purchases for foreign investors say the 10% market decline was natural and that the overall trend would maintain positive. vlad.nicolaescu@zf.ro