The Romanian Investor Relations Association (ARIR) presents the main conclusions of the capital market professionals present at ARIR’s monthly debate ”Market Sentiment”. The guests discussed global and local market trends, the lates changes from the Romanian capital market in Romania and the expectations for 2021.
Cristian Popa, CFA, Member of the Board, NBR:
””Never owe more than half of what you can easily pay” said Eugeniu Carada, the founder of the National Bank of Romania. The amount you can “easily pay” is higher when you are listed on the stock exchange, when you can issue new shares to supplement your capital, when you can show to the bank that investors are beside you. Being listed on the stock exchange increases the credibility in front of bankers: the development of companies through the capital market, access to investment capital, but also the transparency that comes with this also bring an increase in the financing capacity and access to bank credit.
Over 7 million Romanians actually invest in the stock market as part of their retirement savings are invested in listed companies. Many Romanians may not realize it, but when they buy some products, for example oil (OMV Petrom), certain banking services (BRD, Banca Transilvania and Patria), certain medical services (MedLife) or food (KFC restaurants), utilities (Electrica, Transgaz, Transelectrica, Romgaz) or certain telephone services (Digi), in fact they buy from a company in which they are shareholders, because they indirectly hold shares through private pension funds. Education is the foundation on which the future is built and when it comes to financial education, the National Bank is there, educating young people about its activities: over 200.000 students have been visited by my colleagues in the last 5 years.”
Dragoș Manolescu, CFA, Deputy CEO, OTP Asset Management:
” We have seen a return of capital from developed markets tO emerging markets in this period, and this can be noticed also if we are looking at the Bucharest Stock Exchange wherethe main index increased by over 8% in November. We have noticed a violently positive reaction after all the anouncements regarding the vaccine. In the last 10 years, the Bucharest Stock Exhange did not record such a growth as in 2020. Moreover, the Ministry of Finance has resumed Fidelis Programme, a positive aspect for the stock exchange. Those interested can open accounts at brokers and can also invest some money directly in shares. We would like to see a migration or at least a diversification of those who invest only in bonds, bank deposits or government securities to shares because, in the medium and long term, to ”beat” inflation shares should not be missing from the investor portfolio.”
Cosmin Mizof, CFA, Head of Risk Management, Certinvest:
”It is difficult to predict what will happen next year when we are making forecasts regarding the direction of the markets. Everything seems to be going well, along with the encouraging news regarding the vaccine, but let’s not forget that in the capital markets you are very close to the next unexpected event. I think that the only advice we can give is to diversify, to be disciplined in our investment approach, to save and to invest regularly. We can observe a growing interest of investors towards small or newly listed companies. If we look at the performance of the BET index, we notice that it came from the segment of small companies where TeraPlast, Medlife and Nuclearelectrica occupy the podium, with a total percentage of 6% in BET index. A possible risk for investors, important to follow, is how companies will react when the current moratorium on interest payments and bank loans is lifted.”
Irina Răilean, CFA, Head of Research, BT Capital Partners:
”Third quarter financial results brought positive surprises from some companies even more affected by the crisis than initially thought. In the fourth quarter, we expect an increase from the companies from the energy sector, present also on the Romanian capital market, but not at the pre-pandemic level. The pressure on the financial results will continue, as the consumption lowered due to the ongoing restrictions for restaurants and the fact that many employees are still working from home.”
Daniela Șerban, ARIR President & Co-Founder:
”This year revealed that volatility can reach new dimensions and, while a 30% decline in global markets seemed impossible at the beginning of the year, February and March have shown us that -30% can happen when we have a situation of such magnitude. It was a difficult, challenging and unpredictable year and the only constant is that we have to save or, even better, invest, if we are in that point. The only rule that is kept is long term thinking and investing constantly.”