SIF shares are increasingly more in synch with Erste's

The shares of the five financial investment companies are increasingly more correlated with those of the Austrian bank Erste, with investors banking on the fact that the Austrian bank will propose the SIFs to give them Erste shares for their BCR stakes, as it did with BCR’s employees.
The latest analysis reports on the market about SIFs also evaluate the SIFs using the scenario in which they get a similar offer from Erste to that made to the BCR employees. If this happens, then Erste’s stock market value will be the starting point for calculating the value of the SIFs.
“The SIFs, in theory, have a strong negotiation power to obtain at least a similar offer (if not a better one) to the one Erste made to the employees,” says CA IB Securities in a report written at the end of last year. “However, until an agreement is reached between the SIFs and Erste on such a swap and an actual Erste listing on the BSE, this is only our theoretical view and should be regarded with caution,” the analysis report says. The all time high reached by Erste early this year overlapped with the all time high reached by the SIFs, with both the shares of SIFs and Erste going down afterwards.
The correlation coefficient between the trend of Erste shares and the SIF index, BET-FI, is 0.8, calculated for the last four months, which means a strong correlation, particularly because there were days when the SIFs or Erste did not trade. The correlation coefficient can be anywhere between minus and plus 1; if it is 1, then there is a perfect direct correlation, and if it is minus 1, then there is inverse correlation (decline of one share corresponds to rise of the other).
Erste offered BCR’s employees the possibility to swap 6 BCR shares for one Erste share. At a price of 60 euros per Erste share, the offer would mean 10 euros for one BCR share, which would put BCR at 7.9 billion euros, and the stakes held by the SIFs at 475 million euros each. The SIFs own 6% in BCR each, except SIF Oltenia, which owns 6.12%. Erste was quoted at around 57 euros per share at the end of last week, and the analysts blamed the decline on the investors that were collecting their profits from the growth of the last few months. Most analysis reports are still favourable to Erste shares. JP Morgan and Soci?t? G?n?rale recommend buying the shares of the Austrian bank in their latest reports.
The SIFs capitalisation on the Stock Exchange is fluctuating between 450 and 600 million euros, considering that besides the BCR, the SIFs also own significant stakes in hundreds of other companies that include BRD, Banca Transilvania and Bancpost.
On the other hand, the entire Romanian capital market has seen an increasingly stronger correlation with the markets in the region, primarily because of the major institutional investors operating on these markets.
“The indices of the Bucharest Stock Exchange are correlated with those of the Vienna Stock Exchange, too; however the fact that SIFs reached their all time highs at the same time as Erste could be a coincidence,” says Adrian Caramiha, manager of Eastern Securities. “I believe an equity swap offer for SIFs is a plausible option, particularly because of the precedent of the bank taken over by Erste in the Czech Republic,” he added.