ECONOMY FINANCE&BANKING

Laurentiu Nedelcu, Manager for Central and Eastern Europe, Saxo Bank: Financial markets of Romania and of Europe – a problem of confidence?

Many people from the financial banking area have asked me how is Saxo Bank seeing the results of the Romanian stock exchange in H1 of 2016, bearing in mind the official results posted, which place Romania in the slump area. In the general European context, -7.6 percent – the amount by which the BET index dropped – is not bad at all. If we look to our neighbours to the west, the results registered since 1 January 2016 are -23 percent in Italy, -8 to -10 percent in Spain; France and Germany are between -5 percent and -1 percent, still in the red, even Denmark is in the same area.

United Kingdom is at +10-12 percent, but just because the GBP fell significantly, so in contrast to the EUR or USD the picture is no longer so positive.

Markets are now generally affected by lack of confidence – on one hand European banks suffered significantly and continue to suffer, some are registering record lows, on the other hand we have the Brexit, which threw a Molotov cocktail on markets in general, not just on the European ones, plus other potential factors of disruption – the imminent elections in the U.S., the changes of government such as the one in the United Kingdom, where the new Premier is just being promoted etc. Bad news are coming from across the ocean too, where stress indicators are at elevated levels, and the jostling for safe instruments such as U.S. treasury certificates continues among professional/institutional investors.

In contrast to other regional countries, the Bucharest Stock Exchange (BVB) has successfully overcome the Brexit test. This aside, the stock exchange capitalisation level and trading volumes remain anaemic, far from those in countries such as Poland and Hungary if we are to compare ourselves to our closer neighbours. Romania is registering healthy economic growth seen in the European context, however this growth has not yet managed to give sufficient spur to the transformation of the stock exchange into a modern, dynamic, liquid one that of course would represent an additional catalyst for the same economic growth and for the attraction of considerable sums from foreign investors who are currently looking onto the BVB with reservation.

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