The Bucharest Stock Exchange (BVB) should be in for a busier year, according to consultancy firm Ernst & Young. The two main causes will be positive outlooks among local business leaders and the expected listings of several state companies.
At a global level, institutional investors appear far more optimistic: in 2012, 82 percent of the institutional investors surveyed by Ernst & Young invested in pre-IPOs and IPOs, compared to less than 20 percent in the previous two years. The more than 300 investors in the study also painted a rosier picture of the investment environment, saying the improved macroeconomic situation promised better chances of profits and that capital markets will be more stable this year.
Although at a global level, investors appear to favor domestic markets, in Europe there is more enthusiasm for foreign markets. According to Ernst & Young, 41 percent of European investors expressed a preference for investing in other regions.
When looking at IPOs, the “right” price appears to be the most important factor. Some 91 percent of the institutional investors surveyed rated an appropriate price as the most important consideration, while 85 percent of respondents gave overestimation of price as the biggest threat to an IPO’s success.
Overall, 51 percent of respondents said that financial services ranked in the top three in their investment portfolios. Next up were retail (35 percent), consumer goods (27 percent), oil and gas (26 percent) and technology (21 percent).
The views of institutional investors on what makes public companies successful could be of particular interest to Romania, with several IPOs of state companies planned. Most investors believe that the success of public companies overwhelmingly depends on three factors: operational excellence (66 percent), meeting investor expectations (also 66 percent) and using income from the IPO as planned (47 percent).
Ernst & Young carried out the study during November and December 2012, surveying 312 institutional investors worldwide. The aim was to determine what information investors need and what factors have the greatest impact on their decision to buy or sell.
Ernst & Young is a global professional services firms with approximately 167,000 employees in 700 offices across 140 countries, and revenues of approximately USD 24.4 billion in 2012. In Romania, Ernst & Young was set up in 1992 and now has 500 employees in Romania and Moldova. The firm provides assurance, tax, transactions, and advisory services to clients ranging from multinationals to local companies. Ernst & Young has offices in Bucharest, Cluj-Napoca, Timisoara, Iasi and Chisinau.