Abstract
Recession and correlation - the two words that appear more and more often in the debates regarding stock exchanges. So often that there are grounds to believe that repeating them endless make them really happen. Since the begining of the year BET lost 30%, while the american index Dow Jones lost 6.5%. Such a difference could make us wonder whether investors are not forgeting the fact that there are disputes about recession in US, and not in our country. In fact, the expected growth for this year in Romania is 6,5%. Unfortunetly, as long as the US economy stay as it is, the international investors are unlikely to welcome the idea of further investing in emergent economies, causing the falling of the national currency, which could be of great help for the exporters. On the other hand, the economic progress estimated for this year puts pressure on the current acoount deficit, which will be less covered by foreign direct investment, only an increase in competitivety being able to offset the decline of cash inflows. Therefore the effects of the recession in US, if confimed, are likely to regard the current account deficit, which could mean that if we wouldn’t have our own problems we probably have no ground to watch so close the US macro situation.
The stock exchange is also sensitive at swifts in foreign investor’s sentiments, as before the sub-prime crisis, the purcheses of those investors were significant (counting for more then 50% of the total volume in some months during last year) becoming an important determiner of the BSE growing. The strong change in BSE’s trend could be the effect of the prejudice that the big growths from the previous years lead to overevaluation. Even if this is the case, the fact that only three companies ( Zimtub, UCM Resita and Socep) rose since this year begun, could be a signal that this idea could be not quite accurate. The market should price in the fact that romanian companies have finacial performances over those reported by companies in mature markets. Decisive for the evolution of the BSE and international stock markets is the investor’s sentiment. In US, the FED’s gumption in finding new instruments ment to help financial recovery lead to temperating of the concerns regarding the current stage of the sub-prime crisis, and have been replaced by the US recession fears. Therefore, investors are back in watching the macroeconomic reports, which for now are giving contradictory signals. On Monday, the National Association of Realtors said sales of existing homes rose 2.9 percent in February, the first gain since last July, while, on Tuesday, Consumer confidence was reported to sank to a five-year low in March. The latter reading could be a serious proof that spending will likely drop, which deepen worries that economy has fallen into recession. Thus, the surprising gain in home ales should be, for the moment, treated as a trend’s exception, not a reversal.
Regarding the BSE’s further evolution, it seems like the romanian investors are waiting for foreign investors to come, as there is the feeling that no spectacular raise could be seen until then. The last year was unique, as investors were waiting for a large number of foreign investors to accumulate domestic stocks after the EU admission. But, in recent months those investors are backing off. Hence, we estimate apathetic growths in the week to follow, but a swift in the trend is hard to imagine as long as investors don’t regard underlying fundamentals of the companies.
This week
Last week BET and BET-C won 1.56% and2.64% respectively, while BET-FI went up 2.13%. The average trading volume lost 27.43% to 30.85 million lei daily, while the market capitalization went down 2.54 percent to 112.95 billion lei.
| BVB indices | |||
| indices | Change | Mar 21, 2008 | Mar 28, 2008 |
| BET | 1.56% | 6,857.70 | 6,964.38 |
| BET-C | 2.64% | 4,873.40 | 5,002.20 |
| BET-FI | 2.13% | 52,660.71 | 53,779.78 |
BET (chart)
Top price Gainers
Electrocontact had the most significant growth of the price in the week to end, as they rose by 12.24%. From the begining of the year this stock fall from 0.1010 to 0.0550, as the company reprted a 10% decrease in sales and a 70 percent fall of the profit. Also in this top was TMKArtrom, with a 9.09% rise. For this year the company estimates a 42 percent appreciation, to 745 billions lei and a profit rising from 21 billions to 29 billions.
| TOP 5 - PRICE GAINERS [RON] | |||
| Symbol | Change | Mar 21, 2008 | Mar 28, 2008 |
| ECT | 14.5833% | 0.0480 | 0.0550 |
| ARM | 10.4816% | 0.3530 | 0.3900 |
| ALR | 9.7015% | 6.7000 | 7.3500 |
| ART | 9.0909% | 27.5000 | 30.0000 |
| BRD | 7.4074% | 18.9000 | 20.3000 |
ECT (chart)
Top price losers
The first in this top is Condmag, followed by Turbomecanica. The latter announced a more than 50% decline of the profit, falling to 7.67 billions lei. Moreover this week was announced the subtitution of the Turbomecanica by Transgaz in theBET’s structure.
| TOP 5 - PRICE LOSERS [RON] | |||
| Symbol | Change | Mar 21, 2008 | Mar 28, 2008 |
| COMI | -9.0361% | 0.8300 | 0.7550 |
| TBM | -8.0000% | 0.4750 | 0.4370 |
| VNC | -7.6271% | 0.1180 | 0.1090 |
| BCC | -7.4074% | 0.2700 | 0.2500 |
| APC | -6.3291% | 0.7900 | 0.7400 |
COMI (chart)
Top Volume
SIF5 was the most traded last week, while compared to its totalnumber of shares the most significant trades were conducted with Mecanica Ceahlau’s shares, as SSIF broker Cluj sold shares representing 1.73% from the total number of shares.
| TOP 5 - TOTAL VOLUME [RON] | |
| Symbol | Volume |
| SIF5 | 22,937,213 |
| SIF2 | 16,599,728 |
| BRD | 15,820,548 |
| SIF4 | 14,070,469 |
| TLV | 10,100,191 |
| TOP 5 - VOLUME (% of subscribed capital) | |
| Symbol | Volume / Number of Shares |
| MECF | 1.77% |
| SCD | 1.77% |
| SIF5 | 1.36% |
| SIF2 | 1.32% |
| BRK | 1.18% |
This year up until now
Since the beginning of the year BET and BET-C lost 29.21 and 24.94 percent, respectively, while BET-FI is 31.64 percent lower than its level on 21st of December 2007. SIF5, SIF2 and Banca Transilvania had the highest trading volume for this period. The trades with SIF Moldova, SIF Oltenia, Siretul Pascani 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 Mar 28 2008.pdf, 73 Kb
