Johan Meyer, CEO of Franklin Templeton Investment Management Limited and Portfolio Manager of Fondul Proprietatea, published an article entitled “Unlocking Romania’s Potential” on the Investment Adventures in Emerging Markets blog, analyzing the prospects of the Romanian capital market to be promoted to emerging market status.
The author draws attention to those issues that raise questions to foreign investors.
“More recently however Romania has experienced higher political volatility, reflected in numerous Government reshuffles and legislative changes taking place at an alarming rate in the economic, fiscal and criminal fields. These developments raise question marks among investors and international institutions, for which a stable and predictable legal framework is crucial.”
The portfolio manager of Fondul Proprietatea argues that “even though Romania’s GDP growth is projected to slow down in 2018 to 4.1%, according to the European Commission forecast, growth is still projected to outpace many of its regional neighbours.”
“This is one reason we believe this frontier market’s future remains promising, as long as Romania stays firmly committed to the values of the EU: rule of law and free-market principles.”
Johan Meyer proposes strengthening corporate governance in order to maintain Romania’s attractiveness as an investment destination.
“Equally essential is maintaining and properly implementing the current legislation on corporate governance, especially for state-owned enterprises. Improved corporate governance could also provide the Romanian government with cash for other investment projects, such as tackling the country’s infrastructure deficit.
From our on-the-ground experience, we think improved corporate governance could also raise the profile of the BVB for foreign investors. In our view, a stable, predictable and transparent regulatory framework is critical for fostering and promoting investor interest in Romania. At a moment when the economy is slowing down, the country’s credibility among investors and international financial institutions should be a priority for the political leadership.“