Although Wednesday’s secondary listing of Fondul Proprietatea (FP) on the London Stock Exchange (LSE) has attracted 11 times more liquidity on Wednesday in London against the whole market in Bucharest, which did not record any significant advance on Thursday for the major stock indexes, it is expected that this move will produce positive effects for the local market in the medium and long term, brokers told energynomics.ro.
The listing has produced some fears to the local Exchange, which saw in FP London secondary listing a possible decrease in liquidity in Bucharest, which would affect the local market success to climb from frontier market to the emerging market status within indices that take into account the investment funds. Though MSCI has no such quantitative criterion for improving the state of the local market, it is present if the FTSE case, analysts say.
“The FP listing has not stirred the Bucharest market. I think the market is still waiting and still evolving under the influence of what happens in foreign markets at the moment. It is obvious that the listing of the Fund may henceforth bring more visibility, liquidity and volatility of the local market,” says Luarenţiu Roşoiu, deputy director of SAI Star Asset Management.
The presence of a Romanian title in Europe’s financial center draws attention to the exposure to Romania, mainly on FP’s energy basket titles, which will increase the long term.
“The basket itself can be interesting for foreign investors. Furthermore, even if they move some liquidity in London, that would not move the bulk of liquidity. Not even in other dual listings, Romgaz and Electrica, the bulk of liquidity did not move to London, but 80% of transactions are still in Bucharest”, Roşoiu says.
“On the other hand, the listing of FP brings visibility, image, including FP dynamics and management, of which Romania will have everything to gain”.
Energy titles will be more visible
With the increasing of capital flows injected by the European Central Bank within the quantitative easing process, most institutional investors are “sitting on money” and are in search of better returns. “I expect some of this surplus to turn to the Bucharest market”, says the analyst.
In addition, Romania is a in a positive equation in terms of macroeconomics and increase investor confidence and consumption in recent period could turn towards Bucharest foreign funds’ attention. “Given that you have an economy that looks good, the yields of some companies are good- especially energy companies have an average dividend yield of 7-8% over the market price, overlapped with the favorable image created by FP, I expect that the liquidity would rather come to market, with a reduced risk of leaving it”, commented he.
The BET Index opened on Thursday on green, with all titles in the composition slightly increasing. In the first three hours of trading energy titles in FP composition recorded an advance of under 1%, with OMV Petrom leading, with an almost 1% plus, followed by Transgaz, which, although not in the FP portfolio, grew by 0.55% and Electrica, which rose 0.42%, the titles stagnating at around 12.00 local time or registering slight losses. FP opened slightly up, by 0.33%, stagnating around the same hour in neutral position and later on losing ground.
