Abstract
Fed’s chief testimony before the Congress indicates economic growth as a bigger concern as compared to inflation, thus confirming expectations for a new rate cut on March 18. In fact, the message in Bernanke’s testimony does not differ from the same opinions expressed one or even two months ago. This should not be viewed as a surprise, as we’ve also anticipated a 9 to 12 months period before any sign of recovery from the present market imbalances appears.
Some differences exist, however, and theyconsist in analysts’ opinions, those expressed by media and the attitude embraced by investors in general. Indeed, the crisis is accepted and negative reports are already expected in some extent, so that surprises stand a higher chance to be positive ones. It is, however, to early to consider this adjusting period as shorter than previously expected. Moreover, tough times are just approaching with the already priced-in tax cut on March. After this date, Fed will find its ammunition seriously diminished for its continuing psychological warfare to bring confidence back to markets. Also, Fed will also have to deal to a more substantial threat imposed by inflation. In fact, the Institution can continue cutting rates to fight recession only if inflation naturally ceases to pose a threat due to slowing economic growth. This painfully slow process is likely to complicate Fed’s decisions in a matter of months, and these difficulties could easily reflect in markets’ higher volatility and a gloomier background for local markets as BSE as well. However, readings on inflation should offer more insight on a possible growth stabilization later this summer, and it’s those reading that should attract maximum attention.
Although the overall market should not bring out optimism, avoiding some particular investments for others instead for investing on indices structure could still offer superior returns. For instance, oil prices might point to diversified oil companies that might pull out strong gains this year. In the same time those dealing only in oil refining and marketing might pass through a rough period. The strong evolution in crediting for the main player in banking market – BCR, might offer precious insight on the reasons for which BRD’s share of the market was reduced. Investment companies will keep their correlation high with foreign markets, but Shareholder’s Meetings might bring important changes that could boost prices to make up for the relative undervaluation compared to their holdings. Finally, the two IPO’s could have offered additional investment opportunities, if only the size was larger, the attractiveness higher and the timing better, otherwise additional cautiousness would be better. Similarly, investments highly dependent on Government’s decision (Antibiotice, Automobile Craiova) bring additional risks, in a market where, at this time, risk is at its highest.
Last week
Last week BET and BET-C gained 1.91 and 1.49 percent, respectively, while BET-FI went up 4.21 percent. The average trading volume gained 63% to 47.4 million lei daily, while the market capitalization went up 2.7 percent to 116.47 billion lei.
| BVB indices | |||
| indices | Change | Feb 22, 2008 | Feb 29, 2008 |
| BET | 1.91% | 7304.45 | 7444.05 |
| BET-C | 1.49% | 5126.2 | 5202.33 |
| BET-FI | 4.21% | 58099.52 | 60544.52 |
BET (chart)
The highest gain last week belonged to Energopetrol Campina (+25.81%); ENP managed to increase its 2007 profits by 50%, to only 257.9 thousand lei, however. ENP gained 13.6 percent in Friday, while its trading volume was significantly higher in the last two couple of weeks. Another company with only marginal profit was Carbochim, and the company also gained 15.75 percent, on low trading volume however. More significant was the SIF Transilvania’s presence in the Top gainers, as the company advanced 8.75% during the five trading days.
Mecanica Ceahlau lost the most last week (-9.43%) on very low trading volume; the other Friday 2.2 millions shares were exchanged for 0.53 lei/share. Though its sales grew in 2007, net profit lost 35% to 1.9 millions. Agras also lost 8.3 percent last week, understandable as the company only traded for three days in February.
| TOP 5 - PRICE GAINERS [RON] | |||
| Symbol | Change | Feb 22, 2008 | Feb 29, 2008 |
| ENP | 25.81% | 4.65 | 5.85 |
| CBC | 15.75% | 14.6 | 16.9 |
| MEF | 12.63% | 1.9 | 2.14 |
| ARM | 11.25% | 0.4 | 0.445 |
| SIF3 | 8.75% | 1.6 | 1.74 |
SIF3 (chart)
| TOP 5 - PRICE LOSERS [RON] | |||
| Symbol | Change | Feb 22, 2008 | Feb 29, 2008 |
| MECF | -9.43% | 0.53 | 0.48 |
| ASA | -8.30% | 0.53 | 0.486 |
| SRT | -7.38% | 0.0637 | 0.059 |
| STZ | -6.76% | 0.74 | 0.69 |
| PCL | -5.39% | 3.71 | 3.51 |
ASA (chart)
Last week the most traded were, by far, the Financial Investment Companies, with SIF2 Moldova and SIF5 Oltenia leading. Banca Transilvania also had a good liquidity, while compared to its total number of shares broker Cluj registered significant trades.
| TOP 5 - TOTAL VOLUME [RON] | |
| Symbol | Volume |
| SIF2 | 35,889,415 |
| SIF5 | 30,395,903 |
| SIF1 | 21,162,625 |
| TLV | 19,125,671 |
| SIF4 | 18,950,351 |
| TOP 5 - VOLUME (% of subscribed capital) | |
| Symbol | Volume / Number of Shares |
| SIF2 | 2.40% |
| SIF5 | 1.51% |
| SIF1 | 1.33% |
| BRK | 1.26% |
| SIF4 | 1.24% |
This year, up until now
Since the beginning of the year, BET and BET-C lost 24.24 and 21.95 percent, respectively, while BET-FI is 23.04 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 and 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 29 2008.pdf, 74 Kb
