The first economic effects of the crisis in Russia-Ukraine-Crimea did not take long to appear, as the investors all over Europe are worried about the conflict. In this context, the Bucharest Stock Exchange (BVB) opened their first session of March with downfalls on all indices. BVB dropped 2.27 percent in the first part of its session and the financial investment funds’ shares reported plunges between 3.2 and 6.3 percent, under the pressure of tensions in Ukraine.
The BET index lost 2.5 percent after the first half an hour of trading, as the German stock exchange reported a similar plunge at 10:30 am (Bucharest time). This is the most severe drop on the local stock market over the past few months and all 20 most traded stock reported corrections of more than 1 per cent, Proprietatea Fund lost 1.96 percent and Petrom (SNP) lost 2.38 percent. The major plunge within BET was that of Transilvania Bank, of 4.7 percent.
The quotations of the local currency were slightly under 4.52 RON/EUR in the first part of the inter-banking session on Monday, so that the National Bank of Romania (BNR) revealed a reference exchange rate 1.74 bani higher, of 4.5169 RON/EUR.
During the Friday session, the exchange rate was 4.4995 RON/EUR. The RON depreciated against the USD as well, as the exchange rate went up by 1.58 bani, to 3.2776 RON/USD. The exchange rate RON/ CHF (Swiss franc) went up as well from 3.6989 to 3.7254 units. The RON/USD and RON/CHF exchange rates are calculated by BNR depending on the RON/EUR rate and the EUR/USD and EUR/CHF rates. Upon the opening of the banking session, the EUR was rated at 4.5060 RON, slightly higher than the Friday night values, when the exchange rates were made at 4.500 – 4.5015 RON/EUR.
On the other hand, Ministry of Finances drew RON 400 million selling bonds with two-year maturity for an average return of 3.87 percent a year, under the cost accepted at a tender close to maturity in February of 4.08 percent a year. For this tender, the Finance institution received subscriptions in cumulated value of RON 1.01 billion, and the set value of the operation was RON 400 million. The bonds come to maturity in January 2016. At the operation in February for bonds with close maturity, in April 2016, the Finance agreed to pay a 4.08 percent financing cost a year.
The Finance institution also planned for March some bonds in local currency worth RON 2.68 billion, and a tender for five-year bonds in foreign currency, in amount of EUR 200 million, as titles worth about RON 5 billion come to maturity the next month.
Oil, gas on supply risk
Oil and natural gas rose amid investor concern that escalating geopolitical tension over Ukraine could curb energy supplies. Brent crude advanced as much as 2.2 percent to USD 111.41 a barrel on the ICE Futures Europe exchange in London yesterday. U.K. gas for next-month delivery surged the most in more than 17 months, rising as much as 10.3 percent, to 61.95 pence a therm (USD 10 per million British thermal units). That’s the highest price since January 31, bloomberg.com informs. “Russia controls the gas into Ukraine, which in turn has pipelines into Europe. The Europeans are heavily dependent on Russia in terms of gas. They are looking for alternatives but can’t find them easily.”, Soeren Bo Duvier Nielsen, a senior energy sales manager at Nordea Bank AB in Singapore said. Gas usage in the U.K. is near a 12-year low amid mild weather that cut heating demand. European gas storage was about 50 percent full on Feb. 23, against about 42 percent a year earlier, data from Gas Infrastructure Europe in Brussels show. U.K. gas slid from 68.91 pence on Dec. 31 on ICE Futures Europe. U.S. gas futures jumped as much as 2.8 percent to USD 4.736 per million British thermal units in electronic trading on the New York Mercantile Exchange, after sliding 25 percent last week.