Romania – growth champion among world Frontier Markets, as returns exceed 40pc

Romania’s equity market is profiting from the positive macro backdrop. BET Total Return (BET-TR) index, which also includes the dividends distributed by the most traded companies listed on Bucharest Stock Exchange (BVB), has jumped by over 40% in USD terms year to date (YTD), and thus it reports the fastest growth among all 23 MSCI Frontier Markets Index countries, a Berenberg analysis shows based on Bloomberg data. The increase comes from the two-digit dividends for several companies coupled with the market upgrowth as the main index BET reached a 9-year high, the Bucharest Stock Exchange (BVB) informs in a release.

“Romania’s economy is beating record after record. The Eastern European growth tiger is back on track to converge to Western Europe in the not so distant future amid the implementation of important structural reforms during the global financial crisis, large inflows of EU funds, foreign direct investments and its pro-European stance,” said Carsten Hesse, EME Equity Strategist at Berenberg.

“When it comes to most dynamic capital markets, Romania is the place to be not only in Europe but also in the world for the investors who target growth. The Romanian capital market can accommodate growth and substantial amounts of money in the same time, and it’s not only about equities but about bonds as well. At the same time, we want to attract the attention of entrepreneurs so they don’t miss this unique opportunity of financing through the capital market and thus acquire a new business dimension,” stated Ludwik Sobolewski CEO of BVB.

Romania has a great opportunity to be upgraded from Frontier Markets to Emerging Markets, the Berenberg strategist believes. “This would be a game changer for the Romanian equity market as a lot more international investors would start to invest in Romania as seen in Qatar, UAE and Pakistan which were upgraded over the last years. To increase the speed and the likelihood of Romanian being upgraded to EM status, it would be very much appreciated if there would be more large scale privatisations and IPOs on the Bucharest Stock Exchange such as Hidroelectrica and the Bucharest Airport as well as a reduction of the governments stakes in e.g. OMV Petrom, Romgaz and Electrica to increase the free float,” Hesse concluded.

BerenbergBET Total ReturnBucharest Stock ExchangeBVBcapital marketCarsten HesseelectricaEME Equity Strategistemerging marketsequity marketfree floatingfrontier marketsLudwik SobolewskiOMV Petromromgaz
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