Abstract
The favorite macroeconomic debate seems to be centered on establishing whether recession, or, by contrary, inflation, is the main threat for economy in US. This debate is actually a progress compared to last week’s, when analyst were still arguing on whether to mark with “recession” the economic status or wait for other signs of the phenomenon.
Besides this questionable progress in the theoretical knowledge of the crisis, those interested in practical consequences of macro (in)stability should take into account a foreseeable alternation of feeble recovery periods with corrections, triggered by news on inflation, jobs reports, economic growth, write-offs related to subprime credit or official’s declarations. A sustainable recovery of equity markets looks highly improbable for this first half of year, and gains should be the exception not the rule. Even though efforts are being made to bring back confidence in US’ capacity to rebound, increase growth and control inflations, figures will keep confirming the negativist’ opinions and fuel illogical and too-cautious investment behavior. This is, however, a good time to accumulate, a rare moment when blue chips are priced below potential, and those who managed to preserve their financial potency are likely to take advantage (see Microsoft or Berkshire).
The international crisis could have passed over BSE without leaving permanent scars, as losses would have been recuperated as soon as they turned unjustified. However, the frail political equilibrium triggered some popular governmental decisions, which in turn might develop into economic imbalances that could postpone recuperation. These are only fears of some time too sensitive rating agencies, but the approach of elections this year could amplify this kind of behavior. Is worth noticing that the long term threat for local stocks, one hard to recuperate if turns to be true, comes form inside the country and not from foreign markets.
Meanwhile local companies seem to have had a good year in 2007, and odds are good for this year too. Although it will publish its results only on Tuesday, Petrom is unlikely to offer negative surprises, as it is already recognized that 2007 was not as favorable as the previous year but this year might reverse the trend as oil price spiked. BRD – the other major local player, obtained profit that toped most analysts’ estimates. It is worth noticing however that credits did not increase as quickly as the rest of the market, due to a more cautious approach (who could blame them…) or maybe a slowing capacity to adapt.
Last week
Last week BET and BET-C gained 2.36 and 3.31 percent, respectively, while BET-FI went up 5.61 percent. The average trading volume gained 7.2% to 29 million lei daily, while the market capitalization went up 3.4 percent to 113.37 billion lei.
| BVB indices | |||
| indices | Change | Feb 15, 2008 | Feb 22, 2008 |
| BET | 2.36% | 7136.17 | 7304.45 |
| BET-C | 3.31% | 4961.89 | 5126.2 |
| BET-FI | 0.81% | 57632.54 | 58099.52 |
BET (chart)
The highest gains last week were obtained by the two largest local companies, Petrom and BRD. Their impact on the market capitalization would have been more substantial, if Erste hadn’t had such large proportion of the market. This evolution could be considered normal, given the forced losses induced by correlation with foreign markets. The financials only could not explain such recovery, as there were already expected and discounted. This gain should not be considered a clear sign of upcoming recovery, and given the lack of a similar evolution on foreign markets, we should question the sustainability of such gain.
Four of the five top loss companies had much worse results compared to last year or insignificant profits. Impact (IMP) only published an apparently impressive result, deriving from a bold recognition of gains from evaluations. Book value should give some precious insight into its relative valuation, not net result.
| TOP 5 - PRICE GAINERS [RON] | |||
| Symbol | Change | Feb 15, 2008 | Feb 22, 2008 |
| SNP | 9.26% | 0.367 | 0.401 |
| BRD | 8.52% | 17.6 | 19.1 |
| MPN | 8.13% | 0.332 | 0.359 |
| SOCP | 6.69% | 0.269 | 0.287 |
| APC | 6.59% | 0.835 | 0.89 |
SNP (chart)
| TOP 5 - PRICE LOSERS [RON] | |||
| Symbol | Change | Feb 15, 2008 | Feb 22, 2008 |
| ECT | -11.57% | 0.07 | 0.0619 |
| MEF | -11.21% | 2.14 | 1.9 |
| COMI | -10.58% | 1.04 | 0.93 |
| IMP | -9.29% | 0.323 | 0.293 |
| ELJ | -7.69% | 0.325 | 0.3 |
IMP (chart)
Among those companies listed through BSE, the SIFs, Banca Transilvania and BRD were the most traded. Compared to the total number of their shares, significand trades were carried out with Rompetrol Well Service and Condmag (the company actually lost 10.58 percent last week).
| TOP 5 - TOTAL VOLUME [RON] | |
| Symbol | Volume |
| SIF5 | 18,225,847 |
| SIF1 | 15,281,197 |
| SIF2 | 13,266,230 |
| TLV | 12,640,451 |
| BRD | 12,323,625 |
| TOP 5 - VOLUME (% of subscribed capital) | |
| Symbol | Volume / Number of Shares |
| SIF1 | 1.07% |
| SIF5 | 0.97% |
| SIF2 | 0.97% |
| PTR | 0.95% |
| COMI | 0.95% |
This year, up until now
Since the beginning of the year, BET and BET-C lost 25.66 and 23.09 percent, respectively, while BET-FI is 26.15 percent lower than its level on 21st of December 2007. The SIFs, Banca Transilvania and BRD-GSG had the highest trading volume for this period. The trades with Siretul Pascani, SIF Moldova, SIF Oltenia, broker Cluj ans SIF Muntenia had the largest proportion in the companies’ capital.
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Copyright: 2006 SSIF Confident Invest Bucuresti SA. All rights reserved.
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Phone: +40 21 320 21 02, fax: +40 21 320 21 03, e-mail: research@confidentinvest.ro, web site: http://www.confidentinvest.ro
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Weekly Update Feb 22 2008.pdf, 121 Kb
