Romania on the road to become Emerging Capital Market
Romania is set to attract billions of Euro once upgraded to an Emerging Market - a status which will allow the economy to benefit from massive capital inflows, concluded representatives involved in capital market at the "Capital Market of Romania - Next Capital Developments" conference, an event organized by the Bucharest Stock Exchange (BVB) and hosted at the National Bank of Romania (BNR)
The Romanian capital market now has a chance, maybe for the first time, for a big quick win, because the upgrade of the whole environment into the family of Emerging Markets is now very close," said Ludwik Sobolewski, CEO of BVB. "We have this paramount objective which we need to tackle: to upgrade Romania to Emerging Market status."
Furthermore, BVB's chairman Lucian Anghel said that they "will keep on pushing inch by inch to meet this objective so that the capital market becomes a financing alternative for businesses in this country."
"It took us four years to get into the Watch list of the FTSE Russell, and the upgrade would be a huge success for Romania, not only for the capital market," Anghel added. "There is a huge competition to attract capital, and funds which are 20 to 25 per cent larger than current ones will be allowed to invest in Romania once the market gets upgraded."
NN Pensions Romania: "We invested about 500 million Euro in Romania in the last nine years and we need to invest double that amount for the next nine years"
Adrian Tanase, the Chief Investment Officer at NN Pensions Romania, said the pension funds need more companies to invest in. "We invested about 500 million Euro in Romania in the last nine years and we need to invest double that amount for the next nine years," Tanase said.
"We are currently not thrilled with the diversification degree we are having for our portfolio. The NN investment fund alone can spend one billion Euro on the local market, but we would like to invest it in a variety of companies. If the local market does not get upgraded, the pension fund will invest the money elsewhere."
This is one area where the state and the politicians can step in, said Attila Szalay-Berzeviczy, head of Group Securities Services at Raiffeisen Bank International, at the conference.
"What the politicians need to understand in this country is that they are not doing us any favours," the former president of the Budapest Stock Exchange said. "When you list companies on the stock exchange this is not making favours to some bankers or brokers. This is doing a favour to your own country. When you are boosting your stock exchange, you are boosting your country."
New opportunities can arise from state-owned companies getting listed on the stock exchange. "Bringing Hidroelectrica to market would really help to comply with free float criterion," said Jim Stewart, vice-president at Raiffeisen Bank.
BNR's chief economist, Valentin Lazea, added: "Having private companies listed on the stock exchange is not enough to assure that the liquidity needed to promote to Emerging Market is met. State companies are needed."
The state will largely benefit from this move as Romania has a chance to capitalize the state-owned companies through the capital market, as the Financial Supervisory Authority (ASF) pointed out. "The perspective of setting up a sovereign fund, a national fund for development, is a good signal to the market," stated ASF's vice-president Mircea Ursache.
Carsten Hesse, EME equity strategist at Berenberg: "Romania will likely offer dividends over seven per cent this year also; double-digit dividends are expected for some companies"
Romania is getting closer to meeting not only the criteria of FTSE Russell, but also those of MSCI, according to Carsten Hesse, EME equity strategist at Berenberg.
"Three companies are already fulfilling the MSCI emerging markets criteria. Romgaz, OMV Petrom and Banca Transilvania are now fulfilling the free float market cap criteria and the trading volume," said Hesse. "The larger free float market cap there is, the more trading there is, and the more likely investors will say yes, Romania is an Emerging Market. It's all about getting the free float up. Obviously, an IPO from Hidroelectrica would be amazing and would ensure that all those criteria are even more easily fulfilled."
Aside from the above-mentioned criteria, there is more to becoming an Emerging Market, BVB's CEO told investors at the conference. "It is not about having three, four or five companies to meet some criteria, but it is the degree to which we are efficient in financing the economy and creating a good marketplace for investors," Sobolewski stated.
And the reality has proven that investors who bought shares in companies offering dividends had an extra reason to celebrate in 2016, as Romania realized the biggest dividends in the world last year, a trend which is likely to continue in 2017, according to Berenberg's official. Hesse added: "I did a conservative analysis and I can happily announce that the yield is going to be around seven per cent again in 2017. This is helped by Fondul Proprietatea intending to pay a special cash dividend so they will have double-digit dividends this year, and by the Government′s recent announcement that they want state-owned companies to pay at least 90 per cent of their earnings. So, we are going to have Transelectrica, Transgaz and OMV Petrom all paying double-digit figures."
BVB launches Made in Romania - a project to promote companies with growth potential
The Bucharest Stock Exchange (BVB) launched "Made in Romania", a "league" of 15 companies leading the growth of the Romanian economy. "Made in Romania" is a project that will identify and promote the most innovative Romanian companies. The project is organized together with Banca Transilvania Group, Google, Mazars, and NN.
"Made in Romania: BVB League" is focused on promoting and advising business which will take place between April and November 2017. Bucharest Stock Exchange and its partners will guide 15 companies by providing training, workshops, networking and business development opportunities targeted to foster their growth. The training will encompass many areas that can be of an interest to any growing company, including but not limited to: branding, marketing and selling techniques, product development, management consulting, financing alternatives, financial reporting, investor relations, listing processes and other related topics.
The project is organized in several stages: nominalization, selection of a short list of companies, and final selection. The first stage will last between February 6 and February 19. The proposals of companies will be primarily put forward by the Nomination Committee, consisting of the local industry experts who are actively involved in the Romanian entrepreneurial and business community. According to its website, Bucharest Stock Exchange invites all the entrepreneurs and representatives of Romanian companies to submit their own nominations through a form available on the project website: www.bvbleague.ro.
In the second stage between February 20 and 21, BVB together with the Nomination Committee members will shortlist 50 companies that will go further into the final stage. The final 15 companies will be officially announced on March 23, 2017 during the first edition of the Bucharest Entrepreneurship Forum, organized by the Bucharest Stock Exchange. A number of 14 companies will be selected by a special Jury consisting of ten top market experts including leading institutional investors, business angels and entrepreneurs, and top business professionals. The 15th company will be selected by the popular vote which will take place between February 23 and March 11.
"By launching ′Made in Romania′ we want to put the future stars of the Romanian economy in the spotlight as well as to help them grow and offer them unique opportunities for development," said Lucian Anghel, president of the board at the Bucharest Stock Exchange.
Members of the Jury entitled to decide on the final set of companies to be included in the project are: Lucian Anghel, president, Bucharest Stock Exchange; Razvan Butucaru, partner, audit and financial advisory, Mazars; Radu Hanga, executive director strategy at Banca Transilvania Group; Candace Johnson, president, European Business Angels Network; Felix Patrascanu, CEO, FAN Courier; Florin Pogonaru, president, Romanian Businessmen′s Association; Rares Rusu, marketing manager, Google; Ludwik Sobolewski, CEO, Bucharest Stock Exchange; Raluca Tintoiu, CEO, NN Pensii; Dochita Zenoveiv, brand innovator, INOVEO.
The Nomination Committee, whose role is to put forward the nominations, consists of the following persons: Vlad Andriescu, editor-in-chief, Start-up.ro; Piotr Bialowas, vice-president, INC SA; Laviniu Beze, president, Association of Capital Markets Investors (AIPC); Vlad Craioveanu, CEO, Impact Hub; Octavian Molnar, CEO, IFB Finwest; Sergiu Negut, business angel; Razvan Pasol, CEO, Intercapital Invest; Andreia Radu, principal banker, International Finance Corporation (IFC); Dan Rusu, senior analyst, Banca Transilvania; Adrian Tanase, CIO, NN; Virgil Zahan, CEO, Goldring.
Radu Hanga, executive director strategy at Banca Transilvania Financial Group and member of the Jury, commented: "Financial Group BT chose to encourage the BVB initiative through our involvement in the ′Made in Romania′ project. We are confident that this project respects our principles of support towards innovative Romanian companies. Supporting Romanian entrepreneurs in the current economical context represents the key to the safety and stability of the economy of the future. "
Furthermore, Dino Ebneter, country managing partner at Mazars, a partner in this project, said: "The SME sector is and will always be the backbone of every economy in Europe. At Mazars, being entrepreneurs ourselves, we are dedicated to understanding the challenges facing small and medium sized businesses and developing tools and mechanisms to help them perform to their best. Globally we have invested in studies which provide analysis, insight, learning and guidance to SMEs no matter where in the world they are operating. With the ‘BVB Made in Romania' project we are more than glad to share our knowledge with the local entrepreneurs and provide mentorship and support to the future players of the Romanian business landscape."
Also, Raluca Tintoiu, CEO at NN said that they support initiatives which prove their potential to create economic opportunities for young people and for society at large. "The ′Made in Romania′ project is such an initiative. I am confident that the development of local entrepreneurship creates the advantage of a more agile economic growth based on a higher workforce productivity level," she added.