Bucharest Stock Exchange down after first round of presidential elections
All stock indices of the Bucharest Stock Exchange are down on Monday, May 5, a day after the first round of the presidential elections in which ultranationalist candidate George Simion won first place with over 40% of votes.
The benchmark BET index was down 2.52% at the time of writing. The composite BET-XT and the energy BET-NG indexes were also down. Approximately 8.2 million Romanian employees are indirectly the largest investors in listed companies through Pillar II private pension funds.
All of the 20 most traded stocks were in the red an hour after the opening, with the largest drops recorded by Electrica (3.8%), Fondul Proprietatea (3.4%), Medlife (3.2%), and Digi Communications (3%). The trend continued around midday, despite the fact that other regional markets showed growth.
“We consider the implications for the market (of George Simion’s victory) to be generally negative,” said a report from Erste Bank sent to investors the same day. “Simion presents himself as a supporter of the US president Donald Trump’s ‘Make America Great Again’ movement. He should be considered the favorite in the second round,” the document states.
Simion is set to face off with centrist pro-European independent candidate Nicusor Dan, currently the mayor of Bucharest. The coalition candidate, Crin Antonescu, did not make the runoff, a failure that may affect the stability of the ruling coalition as well.
The result of Sunday’s voting was anticipated by investors, but the share of votes received prompted a sell-off on the stock exchange.
“I believe there will be market volatility in the next two weeks due to extremely high uncertainty. The possibility of Romania veering toward Euroscepticism will not be well received by foreign investors and Romania’s financiers. According to the rating agencies, what keeps us in the investment-grade category is precisely our EU membership and access to European funds,” said Adrian Codirlașu, CFA Romania president and ASE lecturer, cited by Ziarul Financiar.
Romania has a negative outlook from the three main credit rating agencies (Fitch, S&P, and Moody’s), which implies the prospect of a deterioration in the state’s finances, in the absence of measures to stabilize public finances, and the possibility of being downgraded outside the investment-grade category. The next rating agency review is scheduled for the end of the summer.
The second round of the presidential elections will take place on May 18.
(Photo source: Engdao Wichitpunya | Dreamstime.com)
