Abstract
A week ago, FED chief, Ben Bernanke emphasized once again the three major problems the American economy is confronting with: the risk of falling into a recession, the financial markets turmoil as well as the health of the consumer. But the official recognition of these economical problems and the week results released by the financial companies weren’t liable to cause another strong slump of the capital markets. The insurance companies directly related to the mortgage US sector were the latest to report significant losses. The global economic news with negative impact doesn’t seem to impress anymore investors and the few positive ones aren’t, apparently, stimulating enough. Therefore, the tensions between the sellers not willing to reduce the price anymore and the disbelief of the buyers regarding a possible revival of the ascendant trend of the markets, induced a strong opposition which determined lower volatilities, at least lower than the ones we witnessed since the beginning of the year.
An incipient consolidation period is possible after the strong corrections, but the current macro economical conditions don’t foreshadow a quick bulls’ come back. Some of the following reasons could maintain the current state of uncertainty: the slow down of the American economy, the jobless rate, the construction sector problems, the historical level of foreclosures (according to CNN Money, over 900.000 households are in the foreclosure process, up 71% from a year ago) , the level of inflation for the European Union which exceeded the 2% target (the EU inflation had the fastest pace in 14 year and the European Central Bank decided to keep unchanged its benchmark rate to 4%), the oil prices, which rose above 105$/barrel.
Further, there is only one dilemma which remains to be solved: is the current downside trend going to continue? We believe that the answer is yes and that we won’t see any time now a revival of the capital markets, as the financial results for the future quarters (at least the 1st and the 2nd of 2008) which will be released by the national and foreign companies could negatively surprise the investors since these results will cover the economical activity carried on through the most agitated period since the beginning of the financial turbulences (the last quarter of 2007 and the 1st one of 2008).
Despite the economical grounds and the natural markets correlations, we believe that the upturn for the Bucharest Stock exchange could be influenced by the investment attitude, typical for the undeveloped markets: too high expectations as against the real economical possibilities.
Last week
Last week BET and BET-C lost 2.12% and 1.28% respectively, while BET-FI went down 1.85%. The average trading volume lost 54.11% to 21.75 million lei daily, while the market capitalization went down 3.37 percent to 112.54 billion lei.
| BVB indices | |||
| indices | Change | Feb 29, 2008 | Mar 07, 2008 |
| BET | -2.12% | 7,444.05 | 60,544.52 |
| BET-C | -1.28% | 5,202.33 | 5202.33 |
| BET-FI | -1.85% | 60,544.52 | 59,425.18 |
Top Capitalisation Gainers
Artrom Slatina had the highest growth of the capitalization, with more than 22 millions lei, 4 times the advance registered by SIF Banat-Crisana, which ranked 2nd place in the Capitalisation Gainers Top. The companies’ shares went down 25% since the beginning of the year. The company earned in 2007 an income 36.3% lower than the one the previous year, despite the increased sales, according to the preliminary financial results.
SIF Banat-Crisana had a 5,4 millions lei increase ofthe capitalisation and the shares went up just 0.36%. The company’s management proposed the shareholders for 2008 to choose between the habitual dividends and a capital increase (more specifically the shareholders will analyze the advantages and the possibility of doubling the capital).
TOP 5 - CAPITALISATION GAINERS [MRON]
| Symbol | Change | Feb 29, 2008 | Mar 07, 2008 |
| ART | 22.082 | 429.381 | 407.298 |
| SIF1 | 5.488 | 1,536.778 | 1,531.289 |
| APC | 5.166 | 70.106 | 64.941 |
| PPL | 3.785 | 132.465 | 128.681 |
| ASA | 1.508 | 18.167 | 16.659 |
ART (chart)
Top Capitalisation Losers
Transgaz suffered the most significant decline of the capitalisation, as the company lost 191 millions lei, while the shares went down 6.5%. Although the company’s net income for 2007 was 5.7% lower than the one of the previous year, according to the preliminary results, Transgaz’s management estimates for the current year a net income of 270 millions lei, 20% higher than the one the last year.
SIF Oltenia’s capitalisation went down more than 87 millions lei, and the shares lost 4.46% through the last five trading sessions, the most serious correction among the SIF’s. The company proposed a gross dividend of 0.0780 lei/share and didn’t opt for a possible capital increase, as we believe most of the shareholders were expecting it, consistency with other SIF’s standpoint.
TOP 5 - CAPITALISATION LOSERS [MRON]
| Symbol | Change | Feb 29, 2008 | Mar 07, 2008 |
| TGN | -191.914 | 2,766.853 | 2,958.767 |
| SNP | -169.932 | 22,261.135 | 22,431.067 |
| BRD | -139.380 | 13,868.340 | 14,007.721 |
| SIF5 | -87.025 | 1,862.332 | 1,949.357 |
| IMP | -54.000 | 540.000 | 594.000 |
TGN (chart)
Top Volume
The SIF’s and TLV were the most traded last week while compared to its total number of shares the most significant trades were conducted with SIF Oltenia’s shares, followed by Electrocontact.
| TOP 5 - TOTAL VOLUME [RON] | |
| Symbol | Volume |
| SIF5 | 20,486,127 |
| SIF2 | 11,887,241 |
| TLV | 9,661,466 |
| SIF4 | 8,553,186 |
| SIF1 | 8,204,951 |
| TOP 5 - VOLUME (% of subscribed capital) | |
| Symbol | Volume / Number of Shares |
| SIF5 | 1.08% |
| ECT | 0.92% |
| SIF2 | 0.85% |
| BRK | 0.63% |
| PPL | 0.62% |
This year, up until now
Since the beginning of the year BET and BET-C lost 25.84 and 22.95 percent, respectively, while BET-FI is 24.46 percent lower than its level on 21st of December 2007. The SIFs, BRD-GSG and Banca Transilvania 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.
For further Information please contact Confident Invest, 7 Nerva Traian Str., 031042 Bucharest, Romania
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 8 2008.pdf, 75 Kb
