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October 22, 2020
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Romanian capital market promoted to Secondary Emerging market status. FinMin Citu: Capital market in Romania is a click away from billions of euro

The Romanian capital market has been included in the indices of FTSE Russell indexes for Emerging Markets global provider since September 21, 2020. The decision of FTSE Russell to promote Romania from Frontier to Secondary Emerging market status was taken after our country was retained on the Watch List for three consecutive years.

The Romanian capital market has been included in the indices of FTSE Russell indexes for Emerging Markets global provider since September 21, 2020. The decision of FTSE Russell to promote Romania from Frontier to Secondary Emerging market status was taken after our country was retained on the Watch List for three consecutive years.

The moment was marked by the Bucharest Stock Exchange (BVB), on Monday, by an official opening of the trading session which sees the participation of all the BVB partners that made this historical moment possible, state institutions, regulatory authorities and institutional partners. The event was  also attended by the Minister of Finance, Florin Citu (photo).

FinMin Citu: Capital market in Romania is a click away from billions of euro

The status of emerging market for the Romanian capital market means that companies in Romania are a click away from the billions of euro that will be invested, stated, on Monday, the Minister of Public Finance, Florin Citu, at the Bucharest Stock Exchange.

“We spoke before of this moment and I believe that we glossed over in society over what means to join the FTSE Russell. It is equal, I said then too, it is equal to Romania’s entry into the European Union. Because then we suddenly had access to a very large market. We were part of a common market and of course all the companies in Romania had access suddenly to a very large market. This means also entering this FTSE Russell index. It means that suddenly, the companies in Romania, the capital market in Romania is seen, is a click away from billions of euro that want to be invested. There are people who watch the markets daily, where to invest money. There are billions and billions of euro in this world, and from now they can invest in a single click in Romania too. Companies in Romania can finance themselves more easily,” said Florin Citu at the event that marked the naming of Romania as a Secondary Emerging Market.

He mentioned that the Ministry of Public Finance also used the capital market for financing and mentioned Fidelis, a success and a first because titles in euro were also launched.

At the same time, Florin Citu said that the next stage would be going to the MSCI, the largest market.

Furthermore, he mentioned that he did not see support from the previous governments for the capital market and he does not see today a support of the parliamentary majority that passed the law that bans listing on capital markets.

“I wish that in the future, now that the capital market has the status of emerging market, start-ups in Romania, maybe even unicorns, find financing here. It would be more healthy for everyone,” said Florin Citu.

BVB’s Hanga: Promotion to Secondary Market status, step forward for Romanian business community

Promoting the Romanian capital market to the Emerging market status is a step forward for the entire Romanian business community, Radu Hanga, president of the Bucharest Stock Exchange (BVB), said on Monday.

“The step we are taking now is not just a step of the Romanian capital market, but a step forward that the entire Romanian business community is taking. The story of the Bucharest Stock Exchange began 25 years ago. We were then discussing the end of the first year of trading about nine listed companies, about a value of transactions approaching 26 million lei. If we look where we are now, we have the measure of the big steps we have taken before. We have 370 companies listed on the Bucharest Stock Exchange, a quarter of which are listed on the main market. These are large companies, significant for the Romanian economy. The value of transactions, if we look at the share component for last year, approached 9 billion lei. If we add the value of transactions on fixed income instruments, bonds, we are approaching 11 billion lei, and the total capitalization of the listed Romanian companies is approaching 110 billion lei. The Romanian state institutions laid the foundation stone for the reconstruction of the stock market. Likewise the state companies, the private companies that used the platform of the Bucharest Stock Exchange to finance themselves,” Hanga said at the event that marks the promotion of the Romanian capital market to Secondary Emerging market status.

He pointed out that BVB has an important image component for any company entering the capital market.

“Focusing on state companies, we have beautiful examples – Romgaz, Transgaz, Electrica, Transelectrica and one of today’s stars, Nuclearelectrica. It is one of the two Romanian companies that, with the promotion of Romania to emerging market status, is entering the structure of indices for emerging markets managed by FTSE Russell. It is a measure of the success that state-owned companies have had in coming to the Bucharest Stock Exchange,” the BVB official stressed.

Hanga also reminded that Banca Transilvania was part of the indices for emerging markets, as well as Teraplast Bistrita, the latter in a group of indices for micro-companies.

ARB: Romania’s reclassification as Secondary Emerging market status could attract new investments to the Bucharest Stock Exchange

According to the representatives of the Romanian Association of Banks (ARB), the reclassification of the Romanian capital market to Secondary Emerging market status could attract new investments to the Bucharest Stock Exchange (BVB) from specialized investment funds on emerging markets.

“The Romanian Association of Banks welcomes the implementation of the FTSE Russell decision on the promotion of the Romanian capital market to the Secondary Emerging market status, starting with September 21, 2020, alongside the inclusion of the securities issued by Banca Transilvania and Societatea Nationala Nuclearelectrica in the FTSE Global Equities Index Series (GEIS). The Romanian Association of Banks will continue to contribute to the development of the Romanian capital market and its strategic objective is to obtain full emerging market status from the profile institutions (FTSE Russell and MSCI),” shows an ARB press release sent to AGERPRES on Monday.

According to the quoted source, the FTSE Russell decision comes as a result of the formal screening process that included the collection of information from public institutions and the Bucharest Stock Exchange, along with the calibration of information received versus the perception of institutional investors already trading on the local market.

Orban: Romania’s transition to secondary emerging market status shows an evolution of BVB, still timid yet

Prime Minister Ludovic Orban said on Monday that Romania’s transition to Secondary Emerging market status shows a positive evolution of the Bucharest Stock Exchange (BVB), but stressed that this evolution is still “timid”.

“The fact that Romania today is moving to the status of a secondary emerging market shows a positive evolution of the Bucharest Stock Exchange, but, in my view, a still timid evolution and for this reason our intention, as a Government, is to support the further development of the stock market, the capital market,” Orban said at the event “Emerging Romania” , organized by the Bucharest Stock Exchange.

He pointed to the targeted measures on the development of the capital market: the listing of new state-owned companies at the stock exchange, stimulating the participation of individuals in the capital market by simplifying tax procedures for retail investors, launching new programmes of government securities issues through the stock exchange – stating that such issues worth 1 billion lei and 168 billion euros have already been launched – , encouraging through fiscal incentive measures private companies to list at the BVB for diversification of sources of financing.

“If we look at the financing of companies we will see that in Romania we are far from the capitalist model in developed countries where a large part of the companies’ financing is carried out from the stock market. Our objective is to develop this fundamental instrument for the market economy that is the Stock Exchange,” Orban said.

The Prime Minister also announced that after the parliamentary elections the objective is to change the law on the stock market.

“In the process of developing the stock market, unfortunately, a law appeared, why it was adopted I cannot understand, we also attacked it at the CCR [the Constitutional Court of Romania], unfortunately we were not given justice, which somewhat blocks the sale of assets, shares, affecting the stock exchange listing processes of important companies such as Hidroelectrica that we started. It is clear that the current structure of Parliament cannot allow the amendment of this law, but after the elections [due this December, ed. n.] our objective is to amend this law,” he said.

Iohannis: Romania’s transition to emerging market status, confirmation of the development potential available to the economy

President Klaus Iohannis sent a message on Monday at the “Historical Moment: Emerging Romania” event, in which he states that the transition to emerging market status represents not only a historical performance, but also a confirmation of the development potential available to the country’s economy.

“I congratulate the Bucharest Stock Exchange for its efforts in promoting Romania to emerging market status. It is not only a historical performance in itself, but also a confirmation of the development potential our economy has. I hope that this new status will translate into increasing stock market capitalization, so that our country becomes an important player in the financial markets of the region, which is increasingly dynamic and competitive. We all want to see more Romanian capital listed on the stock exchange and more and more companies that turn to the capital market to finance their investment projects,” says Iohannis, in the message that was sent by the presidential adviser Cosmin Marinescu, at the event organized by the Bucharest Stock Exchange.

He told the “actors” who form the architecture of the financial system – the Financial Supervisory Authority, the Bucharest Stock Exchange, financial investment companies and other operators – that they have a special role in the Romanian capital market.

According to the president, contrary to some initial insights, the negative effects of the COVID-19 pandemic are proving “deep and long-lasting in terms of the real economy” and that in this context “we could face far-reaching structural changes, by re-establishing some economic sectors or even entire industries, with direct impact not only on companies, but also on states and citizens in general’.

“I have kept on insisting on the need for predictability of legislation and public policies. We have all seen, through OUG 114, where former governments’ excesses, ineptitude, but also bad faith in lawmaking, coupled with ignoring the mechanisms of the market economy can lead. You, the representatives of the financial industry, understand best the need for Romania to strengthen, in the near future, on the path of economic responsibility, through policies that restore macroeconomic balances, strongly destabilized in recent years. The situation of public finances is very complicated, with the conditions of a budget deficit estimated at 8.6 pct of GDP in the current year. That is why I once again urge accountability with regard to the management of the budgetary situation. It is imperative to keep away the pitfalls of budgetary populism, which Parliament abounds with at this time, despite any economic and financial records. We must be aware that the safest solution against financial populism is healthy economic education. It guides the development of nations subtly, but essentially,” the president said.

President Iohannis launched the entrepreneurial and financial-banking environment to challenge a joint effort to develop economic and financial education, by involving all relevant factors, from regulatory institutions to actors in the financial system and high-profile universities.

He also appreciated that Romania’s inclusion among emerging markets is “a strong signal of confidence for investors, a signal of hope and predictability for entrepreneurs, by increasing their financing capacity”.

Compiled from Agerpres

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