FTSE Russell, global provider of stock market indices, has upgraded Romania from frontier market to emerging market status, according to an announcement dated September 26.
“FTSE Russell has the pleasure to announce that Romania will receive the secondary emerging market status. As part of its annual review, FTSE Russel’s Consultative Committee for Country Classification has approved the following modification of the rating criterion:
- “Liquidity” – Sufficient market liquidity to back significant global investments – improved from ‘Restricted’ to ‘Admitted’
“The decision was taken after Romania was on the monitoring list for three years.
“The reclassification of the status will come into force next September.
“Consequently, Romania meets FTSE’s 9 quality criteria for the status of secondary emerging market, according to FTSE’s country classification scheme. FTSE Russell congratulates Romanian capital market authorities for attaining this status,” reads the report.
“It’s the first time when a global provider of indexes upgrades the Romanian capital market to emerging market status. The decision was taken after Romania was on the monitoring list for three years. The reclassification of the status will come into force in September next year.
“It’s a historic moment for Romania, whose stock exchange was closed during the communist regime and reopened almost half a century later. When it started to operate again, in November 1995, six companies were listed on the stock exchange. Now, the Bucharest Stock Exchange (BVB) has 84 companies listed on the main market alone and, together, they have a capitalisation of 36 billion euro,” points out a Bucharest Stock Exchange communique.
FTSE Russel performs an annual review of the countries’ classification in the four categories – developed markets, advanced emerging, secondary emerging and frontier, by analysing 21 criteria that are related to the regulative framework, custody and settlement, dealing landscape, derivatives.
Adrian Tanase, BVB CEO: “We are witnessing a historic moment: it’s the international recognition that Romania deserves to be upgraded, and I’m proud and happy to lead the team that has made this moment possible.
“When the stock exchange is doing well, the economy is also doing well. I want the new status to open the eyes of as many managers of private and state-owned companies as possible, and I want them to see the stock exchange as an efficient environment through which they can finance the development of their businesses.”
“We will celebrate 25 years of modern stock exchange in November next year. We want to show our partners that we are making progress in what concerns the development of market infrastructure. In this sense, the Central Counterparty project will create the framework that will allow a significant improvement of liquidity.
“Our goal in the next 10 years is to double the market’s level of representativity in the economy from the current 10 per cent of GDP to 20 per cent.”
Lucian Anghel, BVB President: “For the capital market, upgrading Romania to emerging market status can be considered the equivalent of Romania’s accession to the European Union. Romania deserves to be upgraded because it has proven repeatedly that it is a functional and accessible market.
“Far bigger funds than before, funds that manage hundreds of billions of euro, will be able to invest in Romania in the following years because until now these fund managers were restricted, by default, to invest in frontier markets.
“Romanian investors could benefit in the long term by capitalising on the yields offered by stock exchange investment opportunities.
“We would like to thank all entities involved in the capital market and the authorities that were close to the stock exchange in this process of local market reform, which started almost 7 years ago.”
AmCham welcomes Romania’s upgrade to emerging market status
AmCham Romania welcomes Romania’s upgrade to emerging market status by FTSE Russell, the global index provider, on the occasion of 2019 FTSE Annual Country Classification Review, released on September 27.
The local capital market upgrade from frontier to emerging market has represented for many years not a strategic objective for Romania and has benefited from a broad support from the business community and relevant authorities alike.
“For members of an organization like AmCham Romania that promotes investments as a strategic pillar for sustainable economic growth, this is excellent news, while for Romania it is the growth opportunity that investors have eagerly expected. A functional capital market is critical for connecting a national economy to the global economy amidst a fierce and increasingly complex competition worldwide for financing, and it was an ingredient that was missing from Romania’s investment offer” stated Ionuț Simion, AmCham Romania President.
Romania’s upgrade to the emerging market status, after a three-year monitoring period sends a positive signal to investors and confirms the growth of the local capital market that AmCham Romania actively contributed to as part of the joint efforts to increase the quality of relevant infrastructure and legislative framework.
”It is a historic moment for Romania’s capital markets and a major win for Romania’s image and credibility. I take this opportunity to thank AmCham Romania members for their persevereacnce in pursuing this shared objective. On AmCham’s behalf, I would like to congratulate the Bucharest Stock Exchange for their consistent efforts all along this process, and to also thank public stakeholder, decision –makers and supervising authorities for understanding the importance of this objectives and the role of capital markets for financing businesses, and for being open to the recommendations we have advanced during the consultations. It is proof that sharing the some objective and the burden for their achievement, along with a constructure public-private dialogues is the way to make things happen and brings forth long-term benefits for the economy and for the society. Going forward, this upgrade compells us to continue the capital market development process in order to meet the performance indicators required for the next level, the primary emerging market status, which is the next milestone towards the final goal of qualification for the developed market category. Such aspiration will however need a national politic consensus to complement the joint efforts of the public and private stakeholders that enabled the success we are celebrating today” said Cristian Agalopol, member of the AmCham Romania Board of Directors and co-chair of the AmCham Capital Markets & Financial Services Committee.
CDR welcomes FTSE’s announcement on Romania’s upgrade to emerging market status
Coalitia pentru Dezvoltarea Romaniei-the Coalition for the Development of Romania (CDR) welcomes FTSE’s publication of the official announcement regarding the upgrading of Romania’s capital market to emerging market status.
Romania’s induction in this category confirms all market participants’ ability to concentrate their efforts and actions on identifying and consistently pursuing a common goal.
The attainment of this long-awaited objective is the result of the conjugated effort of public institutions with prerogatives in the financial market, as well as that of the representatives of the private sector, in direct collaboration with the Bucharest Stock Exchange and with the active and constant participation of the member organisations of the Coalition for the Development of Romania ever since the launch of the “8 hurdles” project.
The attainment of the emerging market status is an objective undertaken by the Coalition for the Development of Romania and mentioned in the cooperation agreement signed four years ago with the Romanian Government, starting off from the recognition of the local capital market’s need for development and transformation into a real instrument for the financing of the economy, functional and efficient for the business environment, having the potential to contribute to the sustainable growth of the Romanian economy.
The upgrading to the category of emerging markets, by both FTSE Russell and especially by the MSCI, will lead to a rise in investment flows to the Romanian capital market and the improvement of access to financing for listed companies.
The CDR is confident that the Romanian Government and other public institutions involved will capitalise on the success registered so far and will give priority to the demarches required to meet the criteria imposed by the MSCI, particularly the significant hiking of the market’s liquidity level through the listing of state-owned companies of relevant size, such as Hidroelectrica, and by continuing the creation of the legislative framework for the elimination of the ‘8 hurdles in the development of the capital market,’ for example through the alternative investment funds law.
The CDR expresses its hope that, in the spirit of the collective effort for the development of the capital market, carried out so far alongside Romanian authorities, the joint commitment for obtaining the emerging market status from the MSCI too will be upheld.