State's bond issues push the total trading value on Bucharest Stock Exchange to all-time high
The Bucharest Stock Exchange (BVB) announced an all-time high trading value in 2020, when the total transactions carried out through its platform reached RON 18.3 bln (EUR 3.77 bln). The previous record had been set in 2007 when the total trading value was 14.68 bln (close to EUR 4.4 bln at that year's exchange rate).
"In 2020, on BVB, three companies went public, there were six issues of government securities and 11 issues of corporate bonds, which brought the total financing made through the capital market to RON 5.4 billion or EUR 1.1 billion. Our goal is to increase liquidity, and we have done so successfully because last year we had the best trading year in the history of BVB. Therefore, it is no longer necessary to look at 2007 as a landmark because we have already exceeded that level. We can't drive the stock market if we look in the rearview mirror all the time. We focus on what we have to do to develop our capital market," said Radu Hanga, president of the Bucharest Stock Exchange.
The primary driver for the increase in the total trading value on the Bucharest Stock Exchange in 2020 were the Government's bond sales through the Fidelis program, which totaled over RON 4.7 billion (EUR 975 mln). The Government raised RON 2.52 bln (EUR 518 mln) with bonds in local currency and EUR 457 mln with bonds denominated in euro.
However, the stock trading also increased significantly in 2020, reaching RON 12.2 bln (EUR 2.53 bln), the highest level since 2014. The equity turnover was also 26% higher than in 2019 as the higher market volatility generated new opportunities for investors.
The BET index, which follows the shares of the most traded 17 companies on the Bucharest Stock Exchange, closed the year down 1.72% compared to the end of 2019. Still, the BET-TR index, which also includes the dividends paid by the BET companies, was up 3.39% year-on-year. In December alone, the BET gained 5.6%.
The total market capitalization of the companies traded on the Bucharest Stock Exchange reached RON 154 bln (EUR 31.7 bln) at the end of 2020, of which the capitalization of domestic companies represented RON 101.7 bln (EUR 20.8 bln).
"We look forward to 2021 when we expect the stock market to continue to consolidate its position as the main financing channel for the Romanian companies and the main source of capital accumulation for investors. We want to bring BVB as close as possible to retail customers and explore all the channels that help us achieve this goal. The year 2021 had a strong positive start on most capital markets, and the public health protection measures adopted by various states and the launch and distribution of vaccines signal that the current health crisis can be overcome. We continue to live in an environment marked by low interest rates and excess liquidity, which will support equity prices," the BVB President also said.
"The number one priority for 2021 is to increase the number of investors and increase voluntary participation in the capital market. It is essential to have a partnership with the authorities for the development of the capital market. We want to see as many state-owned companies on the stock exchange because listing minority stakes makes the activity of these companies more efficient through the rules imposed by the capital market," added BVB CEO Adrian Tanase. "It is very important for the Government to use the capital market intensively. We saw this in 2020 through government bond issues. We also want to see decisions regarding new company listings because it is for Romania's benefit to have transparent and performant companies. We are optimistic about 2021. We want to have consistent decisions regarding Romania's economic development. Once the risks generated by the pandemic will be diluted, there are all the prerequisites to have a better year than 2020. Also, for 2021, we expect Romania's representativeness in the Emerging Markets indices to increase as other Romanian companies could be included in their structure."
The Romanian capital market was included, starting from September 2020, in the Emerging Markets according to the classification made by the global index provider FTSE Russell. Romania's promotion to Emerging Market status was possible after two Romanian companies - Banca Transilvania (TLV) and Nuclearelectrica (SNN) - met the criteria required for the upgrade.
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