Every mutual fund that has been operational this year managed to provide investors with a yield above the inflation, estimated to under 10% in 2004, unlike last year when some of the funds performed below the 14.1% inflation. Not all yields of the mutual funds, however, managed to exceed banking deposit interests, which reached as high as 18-19% in some cases depending on maturity.
Top performers were those funds investing primarily in listed securities, such as Napoca or Intercapital, due to the higher-than-expected increase in the stock quotes.
Napoca, which is managed by Globinvest, is a fund that has more than half of its assets invested in listed shares, and provided a 63% yield to its investors since the beginning of the year.
Intercapital, the fund managed by Certinvest, ranked second in terms of performance, due to its 47.7% growth since the beginning of the year. The fund has a little more than half of its assets invested in listed securities.
The very good performance of the stocks on the capital market also helped diversified investment funds, which invest a significant part of their assets in listed securities, even though the bulk of their assets are directed to investments in treasury certificates.
Top performer of this group was BCR Dinamic, with its shares increasing more than 38%.
Still, the prevailing funds on the Romanian market are those that invest in monetary instruments, which come with a low risk. Investments in stocks account for less than 5% of the total mutual funds’ assets.
The interest decline trend induced by the successive rate cuts by the National Bank of Romania was not quick to show in the yields of the monetary funds, with those yields being gradually affected as the fixed yield instruments reach maturity.
At the same time, most of these funds have significant investments in bonds, which even though have their interest indexed in line with the interests on the market, see this adjustment made every three or six months.
The value of bond issues in 2004 was 2,772bn ROL (71 million euros), twice higher than the value of all the issues from 2001 through 2003, thus tripling the Romanian bond market. The bond market, however, is still far behind the stock market, given that the companies listed on the Bucharest Stock Exchange and RASDAQ are worth nearly 11bn euros.
The increase in the value of the bond issues this year was largely due to the primary public offerings put out by banks. On the other hand, the municipalities set new records in terms of issue amounts by mid this year before the local elections.
The biggest bond issue of this year was Raiffeisen Bank’s, which borrowed 1,380bn ROL (34 million euros) from the capital market. The first bank to issue bonds this year was BRD-SocGen (in April). It borrowed 500 million ROL in a three-year issue. Finansbank was the third, with its 410bn ROL (10.3 million euros) issue this autumn.
Latest record in terms of municipal bond issue value was set by Oradea, due to its 150bn ROL (3.7 million euros).
An even higher increase than that of the bond issues was posted by the bond trades on the Stock Exchange. A number of bond issuers chose to use Bucharest Stock Exchange’s trading and clearing system to sell their bonds on the primary market. Most liquid on the secondary market were the bonds issued by banks, with at least one trade a week. Total such trades amounted to 71.3 million euros, 15 times higher than in 2003.
The foreign investments on the Bucharest Stock Exchange (BSE) reached almost 74.7 million euros this year, the highest value of the last five years and 3.5 times higher than last year. Non-residents were the buyers in one third of the trades this year, accounting for 20% of the sales.
Although non-residents did not prevail, the brokers say their presence on the BSE was the main drive behind the over 100% increase in quotes. Non-residents largely went for the most liquid stocks available, such as those of the petroleum companies, Petrom and Rompetrol Rafinare (Petromidia) or those of the banks, i.e. BRD or Banca Transilvania. The blue chips, namely banks or petroleum companies also make an impact on the performance of the smaller companies.
The months with the highest increase in the stock market indices were actually those when non-residents made the largest purchases.
The functioning market economy status granted in EU’s country report, the improvement of the sovereign and individual corporate ratings attracted foreign investors this year. Furthermore, brokers say, the modification of the capital market legislation now provides foreigners in Romania with the same regulations they get anywhere else in Europe. Non-residents bought 199.2, million euros’ worth and sold 152.4 million euros’ worth in 2004, BSE statistics show.
catalin.ciocan@zf.ro ; vlad.nicolaescu@zf.ro