Bucharest Stock Exchange lost 34 percent from the market capitalization since the beginning of the year, says PwC

Bucharest Stock Exchange (BSE) lost from the start of the year, since the first news about Coronavirus, 34 percent (13,2 billion Euro) from the market capitalization, according to a PwC Romania report.

Thus, the decrease since the beginning of this year exceeded the increase of 23.4 percent recorded in 2019 compared to 2018, which marked the best performance of the BSE since the financial crisis. In the last 8 years the average yield registered by the stock exchange indices has exceeded the government bonds yield.

In 2019, BSE’s capitalization increased by 23.4 percent to 37.8 billion Euro, sustained by high dividend yields, local economic growth above the EU average, promotion to the emerging market status and a series of changes to the legislative provisions.

In the context of COVID-19, BET, the main index of the stock exchange, fell by about 25 percent between 30 December 2019 and 30 March 2020, from a 35.1 percent increase recorded last year. The same decrease was registered by the BET-TR index, which includes the first 17 most traded shares, after an advance of 46.9 percent in 2019.

The main conclusions of the report for 2019

• Romania had a market capitalization estimated at 17.9 percent of GDP in 2019, which is below the level observed in Hungary, Czech Republic and Bulgaria.
• In 2019, the stock market indices hit the highest level in the last 10 years, with BET-TR dividend yield averaging 8 percent – still at a significant level.
• The total market capitalization of the 79 analyzed listed companies (for which financial information was readily available) jumped by 33.4 percent in 2019 as compared to the previous year.
• In 2019, no IPOs were concluded on the Bucharest Stock Exchange. Moreover, the number of companies listed on the main market fell from 87 in 2018 to only 83 in 2019 following the delisting process of Oltchim, Boromir Prod, Amonil Slobozia and Petrolexportimport.
• There is a high concentration of listed issuers on BSE regulated segment, with top 5 listed companies accounting for 65 percent of the total market capitalization at the end of 2019
• At the top level, companies are active in the Oil &Gas, Financial Services and Electricity sectors. Therefore, the degree of representation of the economic sectors on the local capital market is low in the absence of several industry leaders.
• In 2019, the electricity sector registered the highest level of market capitalization.
• The highest P/E multiple was reported in the Healthcare sector whilst the lowest were in the Industrial sector and the Financial services sector.
• For the financial services and industrial sectors, the downward trend observed in the last years continued and the valuation multiples of the companies listed on the BSE have decreased significantly and are now at the minimum level of the last five years. The Healthcare sector is at the highest P/E ratio observed in the last five years.
• During 2007 – 2019, the market capitalization for companies operating in Materials, Industrial and Healthcare sectors were least influenced by the economic cycles, whereas Consumer and Oil and Gas were the most affected. Over the same period of time, the smallest variance in the P/E of companies was observed within Oil & Gas.