Romanian stocks are getting hotter: Top gainers on Bucharest Stock Exchange

The good performance of the Romanian economy in recent quarters and the growing initial public offering IPO activity on the local capital market caught the eye of international investors who started pouring more money into Romanian shares listed on the Bucharest Stock Exchange (BVB). This is more and more visible both in the daily liquidity of the market but also in the share price evolution of the most important companies. Real estate company Impact (BVB ticker: IMP) and electricity transport company Transelectrica (TEL) are among the highest gainers, compensating their investors with returns of 80 percent, and 64 percent respectively, year-to-date. These also include dividend yields. “Romania benefits from a special economic environment which is visible in the economic growth, which is one of the highest in Europe, in the exports evolution but also in the evolution of domestic demand. And this is more and more visible externally,” Mihai Chisu, stock broker for Swiss Capital, the largest independent brokerage house on the local market, told Romania-Insider.com. The BET index, which follows the shares of the ten most important companies listed on the Bucharest Stock Exchange, gained 9.2 percent since the end of April, while the daily turnover frequently passed the EUR 10 million mark. “We see inflows from foreign investment funds who come to Romania to benefit from these improved economic conditions,” Chisu added. Romania posted a 3.9 percent GDP growth for the first quarter of this year, the highest among the 28 EU member states. The good evolution of macroeconomic indicators as well as progress made by Romania in reducing its external indebtedness and in fiscal consolidation prompted Standard&Poor’s rating agency to upgrade the country’s rating to investment grade. Adding to these the increased weight for Romanian shares in the MSCI Frontier Markets Index and the overall optimistic evolution of international markets in recent months, the current context is very good for the local market. But it was the Romanian state’s listings that really put Romania on the map for international investors. First it was the Government’s sale of 15 percent in Romgaz, for EUR 391 million, in October 2013, then it was Electrica’s 51 percent IPO, in June 2014, in which the company raised EUR 444 million, a record for Romania’s capital market. These transactions were really determinant for international funds’ setting their eyes on Romania, as they previously had few options for large investments on the Bucharest Stock Exchange.

“Interest for local shares started growing after the Romgaz listing last year, when we saw both capital inflows and new foreign investors interested in the local market,” said Alexandru Palasan, broker for NBG Securities.