Romanian capital market makes it to Top 10 in Europe as EU stock indices experience a troubling first half in 2020

The first half of the year was a difficult and volatile one for the capital markets, and international stock markets felt strongly the effects generated by the coronavirus pandemic. The voluntary and temporary closures of some economic sectors as a measure to protect public health have prompted governments and central banks to announce stimulus packages and measures to help revive the economy, following significant adjustments in international stock markets since their March 2020 nadir.

Under these circumstances, all but two main indices of the EU stock exchanges went into the red in the first half of the year. Denmark and Latvia saw the only growth rates as they spiked up by 9,4%, and 1.6% respectively, according to Reuters data. At the other end of the spectrum, market lows of around 30% were posted by the main indices in Greece (-30.3%), Cyprus (-30.07%), Austria (-29.5%) and Luxembourg (-29.49%). By comparison, Romania’s BET index, mirroring the evolution of the 17 most-traded companies listed on the Bucharest Stock Exchange (BVB), amounted to 8,659 points (-13.21%), which made Romania rank 9th within the EU considering the evolution of the main indices at the end of the first semester.

“Stock markets have benefited from the prompt and unprecedented liquidity injections announced by central banks due to the exceptional situation created by the coronavirus pandemic. The international consensus at the government level to support economic activity has been another fulcrum for stock markets, and the results can already be seen in our market as well. The rapid U-turn of capital markets shows that investors remain cautious-optimistic about the prospects for revitalizing the economy, both globally and locally”, said Radu Hanga, President of the Bucharest Stock Exchange.

The average daily value, and the total trading value for the BVB-listed equities both went up by 5% during the first half of the year.

“It has become obvious that we have a more agile and a better prepared stock exchange to navigate periods of uncertainty, and we should have more confidence in Romania’s ability and in the markets, in general, to cope with crisis situations. There are Romanian companies, either state-owned or privately-held, that offer real opportunities for diversification both at sectoral and regional level, and that is why Romania is on the radar of investors who are interested in capitalizing on this potential. In capital markets, the existing uncertainty translates into volatility, and volatility brings opportunities. For companies, these opportunities mean the possibility of financing at costs that can only be minimized through the stock exchange. For individuals, it means the possibility of financing directly the Romanian companies and thus investing their savings in securities that can bring higher returns in the long term”, stated Adrian Tanase, CEO of BVB.

The total trading value for equities on the main regulated market of BVB accounted for RON 5.58 billion or EUR 1.16 billion at the end of the first 6 months, or 5.07% up from the same period of 2019. The average daily trading value saw a similar growth rate, and amounted to RON 45.7 million or EUR 9.5 million, or 5.08% up as compared to the first six months of the previous year.