Will investors be allowed to hold bigger stakes in the five SIFs (financial investment companies)? This is one of the questions that have tormented the capital market investors for more than two years. No clear answer has been given yet, but SIF stocks soared last week. The surge was grounded by brokers on the mere hope that investors will be soon able to buy more than 0.1% in the capital of a financial investment company.
Shares of the five SIFs logged a 14% increase in 2003, with the average growth pace going up to 43% this year, even though deadlines for dividend granting have already expired. The biggest growth was registered last Friday, when the SIFs stock went up 8%, as the Government endorsed the consolidated capital market law draft. The document, pending Parliament endorsement, no longer stipulates the 0.1% limit when it mentions the stakes investors can hold in the financial investment companies. The stipulation is still included in the SIF status, but can be changed by shareholders. The other novelty comprised in the new SIF legislation is the fact that the five companies can buy back residual stock, namely those shares that are distributed as dividends from the profit of former Private Ownership Funds. In the case of some SIFs, these shares, owned by over eight million shareholders, can account for over 10% in the capital.
Some of the brokers say that investors rushed and bought SIF stock on impulse. “Investors did not take the time to look carefully into the implications of the law, to find out what can happen should the draft be modified in Parliament. If the SIFs started buying back stock, this means they would no longer have money to pay dividends. In the case of Petrom, for instance, the decision to buy back stock pushed up prices, but the surge was short-lived,” said Valerian Ionescu, head of operations at CA IB Securities.
vlad.nicolaescu@zf.ro