Over the past 26 years, the Bucharest Stock Exchange went from nine listed companies at the end of 1995, the year of its reopening, to 370 in 2022, while the value of the listed Romanian companies now accounts for some 13.5% of the country’s GDP, Bucharest Stock Exchange (BVB) president Radu Hanga explained at an event marking 140 years since the establishment of the institution.

“At the end of 1995, we had nine companies listed on the Stock Exchange and a capitalization of RON 26 million […] Now, we have 370 companies listed on the main market and the alternative trading system. The total capitalization is RON 150 billion, and more than 140 issues of listed bonds. The value of the listed Romanian companies is approximately RON 160 billion, the equivalent of 13.5% of Romania’s GDP in 2021,” Radu Hanga explained.

This year, for the first time in the institution’s history, the threshold of 100,000 investors was exceeded, with the number reaching some 128,000. Approximately 450,000 people investing indirectly through mutual funds add to these, the BVB president explained. In addition, some 7-8 million Romanians invest in local stocks through pension funds, he pointed out.

The BVB president took the audience through a brief history of the Bucharest Stock Exchange, which was established in 1882 by royal decree.

Pointing to the “full consolidation and development” currently experienced by the exchange and the country’s financial system, presidential advisor Cosmin Marinescu spoke of the transformations and changes brought by recent crises. “The digital era significantly increased the mobility of capital and the diversification of the financial markets’ instruments. In this respect, stock exchanges can turn into true trend creators.” He also touched on the existing growth potential and how the exchange “has the means and instruments to turn into an important vector for the financial education of the young generation.”

Also speaking at the event, Nicu Marcu, the president of the Financial Supervision Authority (ASF), highlighted the forecasts related to recession persisting in 2023 but also the need for support of the local exchange. “All the initial forecasts regarding the transitory nature of inflation proved excessively optimistic, and the increase in prices and recession remain the main threats to the world economy,” Marcu said. “We need a dose of economic patriotism regarding the support of the exchange and guiding investments towards solid assets of the national economy. This is not about a nationalist attitude, reactionary in the face of the challenges of the global economy, or about populist rhetoric. The term economic patriotism is perfectly compatible with market freedom.”

The speakers at the event also highlighted some of the key moments in the development of BVB since its reopening, including the merger by absorption with the RASDAQ market in 2005; the establishment of the Central Depository, an entity ensuring the clearing and settlement of transactions, and the first privatization via the stock market, of Transelectrica, both in 2006; the 2011 listing of Fondul Proprietatea at BVB, which had a decisive influence on the value of trades and the number of active investors; the 2013 establishment of the working group tasked with identifying the key elements needed for Romania to be upgraded to the Emerging Market status by MSCI; and, in 2019, Romania’s receipt of the Secondary Emerging Market status from the global index provider FTSE Russell. That year has been deemed the best in the last decade, as the BET index rose by 35%, and the BET-TR index rose faster, by 47%, driven by the dividends distributed by companies.

As for what is coming next at BVB, the upcoming listing of Hidroelectrica is the highlight event. Ilinca von Derenthall, the chairperson of the Board of Nominees with Fondul Proprietatea, spoke of the significant interest in Hidroelectrica’s IPO. “We are making all efforts to bring a significant demand to Bucharest from both local investors, who already know the market and know what to expect, but also international investors who have not invested at BVB so far […] There is significant interest; there are world-class investors thinking about this and will move to invest in Bucharest. We are talking about a very large offer. […] even if Fondul Proprietatea notified a certain drop in the theoretical value we give Hidroelectrica because of the change to the legislative environment, this doesn’t mean we are not probably talking of up to EUR 2 billion. The specific terms will be given by the request and demand.” She also explained that the process of selecting the supervisory board, an essential step in the IP, is currently taking place.

Meanwhile, Ciprian Catalin Hojda, a state councilor with Romania’s Government, said the listings of Hidrolelectrica and Salrom “can be a true catalyst for accelerating the pace of listings at BVB and to attracting the attention of investors to our capital market. Furthermore, the successful finalization of these listings at BVB will allow Romania to fulfil in time the objective set as part of the [Recovery and Resilience Plan] PNRR for the end of the first quarter of next year.”

(Photo: Bursa de Valori Bucuresti Facebook Page)

simona@romania-insider.com