Romania's biggest investment fund Fondul Proprietatea, the association of CFA analysts and the Association of Financial-Banking Analysts in Romania (AAFBR) have all argued against the draft law aiming to freeze the sale of stakes in state-owned companies for two years.

The Social Democratic Party (PSD), the biggest opposition force in Romania, has initiated the bill.

The authors of the draft law claim it would "protect national interests in the economic sector." Listing minority interests in state-owned companies doesn't hurt "the national interests," CFA and AAFBR associations argue. On the contrary, it provides a framework in which those companies become more efficient, gain greater visibility for the business environment, and contribute to sustainable economic growth in Romania.

At the same time, the listings of some minority packages bring immediate revenues to the main shareholder, the Romanian state.

"The listing of minority stakes in state-owned companies is and must be a priority for three reasons: the development of the capital market by listing new companies, increasing the performance of these companies as a result of corporate governance requirements and additional revenues to the state budget," reads a joint statement of the two associations.

Separately, Fondul Proprietatea's manager Franklin Templeton urges the Chamber of Deputies, as the decision-making chamber, to analyze the potential adverse effects and to reject the draft bill.

"Listings also play a critical role in Romania's potential upgrade to Emerging Market status, which risks being postponed indefinitely. Romania would thus be sabotaging its own objective," said Johan Meyer, CEO of Franklin Templeton.

Franklin Templeton outlines a list of negative effects of the law, arguing that Romania's country risk would increase, resulting in higher financing costs for the Finance Ministry.

Moreover, Romanian pension funds would be forced to invest in equities abroad in search of higher diversity and returns, due to the lack of new issuers on the local stock exchange.

If it passes the Parliament, the PSD bill will block the listing of energy producer Hidroelectrica, the most valuable state company.

Fondul Proprietatea holds a 20% stake in Hidroelectrica and is directly interested in seeing the company's shares trading on the stock market.

(Photo: Yunki Photoshot/ Dreamstime)

editor@romania-insider.com