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The Romanian stock market goes up by 35 percent in 2019 the largest yearly growth rate in a decade. In 2020 Romania is set to join the Emerging Markets

1/24/2020

  • The BET index, which includes the most-traded 16 companies listed on the Romanian stock exchange, except for the Financial Investment Companies, went up by 35% in 2019. It is the largest yearly growth rate in the last decade posted by the Romanian stock market and the second increase rate in 2019 among EU capital markets. Accounting for dividends, the market spiked up by 47%.
  • Adrian Tanase, BVB CEO:
    • The year 2019 was the building year: we laid the foundations of the Central Counterparty Clearing company (CCP), a fundamental entity for developing market liquidity, and paved the way to meet all the criteria to be promoted to the Secondary Emerging Market status.
    • The priorities for 2020 aim at the logical continuation of this construction: the process to authorize and implement the CCP, which will allow the relaunch of the derivatives market, improve the efficiency of the stock exchange operations for the capital market participants, promote the Romanian companies in the FTSE Russell indices for Emerging Markets, and, last but not least, continue our efforts to significantly improve population participation in the capital market.
    • The year 2020 can be even better for the Romanian stock exchange, if the state resumes the listing process, frozen over the last 5 years, to sell minority stakes in state-owned companies such as Hidroelectrica or CEC Bank. For enhanced relevance, the weight of the Romanian companies listed on the stock exchange as a weight in GDP should double and reach 20% in the next 10 years, and this can be achieved through the involvement and support of the state authorities.

 

The Romanian capital market posted in 2019 one of the best years in recent history in terms of the yearly growth pace. The BET index, which includes the most-traded 16 companies listed on the Romanian stock exchange, except for the Financial Investment Companies, went up by 35% in 2019, the largest yearly growth rate in the last decade. Among EU capital markets, the Romanian stock market reported the second-largest increase, being surpassed only by Greece (+49 percent). When taking into account the dividends, the companies listed on the Bucharest Stock Exchange (BVB) and included in the BET-TR index displayed an increase of 47 percent.

"The year 2019 was the building year: we laid the foundations of the Central Counterparty Clearing company (CCP), a fundamental entity for developing market liquidity, and paved the way to meet all the criteria to be promoted to the Secondary Emerging Market status", stated Adrian Tanase, CEO of BVB.

The global index provider FTSE Russell announced on September 26, 2019, that Romania would be promoted from Frontier Market to the Secondary Emerging Market status. The decision will become effective as of September 2020.

In order to enhance market development, BVB partnered with several energy and financial organizations and established CCP.RO Bucharest S.A. on November 4, 2019. CCP.RO will host the infrastructure that will relaunch the derivatives market in Romania and will provide new mechanisms for mitigating and transferring the risks for the markets operated by BVB and OPCOM, thus enhancing the confidence and activity in these markets.

"The priorities for 2020 aim at the logical continuation of this construction: the process to authorize and implement the CCP, which will allow the relaunch of the derivatives market, improve the efficiency of the stock exchange operations for the capital market participants, promote the Romanian companies in the FTSE Russell indices for Emerging Markets, and, last but not least, continue our efforts to significantly improve population participation in the capital market", added the CEO of the Bucharest-based stock exchange.

The shares of the Romanian companies that meet the eligibility criteria for the FTSE Russell indices are Romgaz, Banca Transilvania and BRD-Groupe Societe Generale. Five other companies could join FTSE Russell indices for Emerging Markets should they meet the liquidity criterion at the next assessment. The five companies are: Electrica, Nuclearelectrica, OMV Petrom, Transelectrica, and Transgaz.

BVB approved at the end of last year a pilot program for intermediaries that act or intend to act as Market Maker for shares, in order to enhance the liquidity of those shares. Following this update, which became effective starting from January 1, 2020, the target for the Market Making activity is to reach at least 15% of the total trading activity in equities.

"The year 2020 can be even better for the Romanian stock exchange, if the state resumes the listing process, frozen over the last 5 years, to sell minority stakes in state-owned companies such as Hidroelectrica or CEC Bank. For enhanced relevance, the weight of the Romanian companies listed on the stock exchange as a weight in GDP should double and reach 20% in the next 10 years, and this can be achieved through the involvement and support of the state authorities", said the CEO of BVB. The listing of Hidroelectrica is almost decisive for Romania to receive the Emerging Market status also from the global index provider MSCI.

The total trading value for equities accounted for more than EUR 2 billion at the end of 2019. By the last trading session in December, the capitalization of the Romanian companies listed on BVB amounted to RON 111.5 billion or EUR 23.3 billion.