Bucharest Stock Exchange's blue chips index BET outperformed by 4.8 percentage points (pp) the average yield of the government bonds over the past seven years (2012-2018), according to a study by consultancy firm PwC. Meanwhile, the total return index BET-TR, which also includes the dividends paid by the companies in the BET, outperformed the Govt. bonds yields by 13.4 pp.

Higher yields have compensated investors who have taken higher risks through equity investments, according to PwC.

The average annual return would have been even higher if recently introduced fiscal and legislative measures hadn't led to a significant drop in the prices of shares listed on BSE, the study said.

Following the market corrections in the last quarter of 2018, the valuation multiples of the companies listed on the Bucharest Stock Exchange have decreased significantly and are now at a five-year low for the financial services, oil & gas and healthcare sectors, according to the PwC study.

“Current stock prices compared to company earning are at attractive levels for investors, but one should also keep in mind that due to perceived legislative and fiscal uncertainty, the Romanian capital market is seen as one of the riskiest capital markets in the region, according to our analysis, after the Greek one. This means that investors are expecting higher returns for placing their money in local equity,” said Sorin Petre, Partner, Valuation and Economics Leader, PwC Romania.  

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