Update2: Black day on the Stock Exchange. BVB loses entire advance in 2018 in one day, issues warning – capital market enters dangerous zone

The volume of transactions on the Bucharest Stock Exchange (BVB) has exceeded RON 1 billion Wednesday afternoon at 16.00h, with BRT Index falling by 11.76%, whereas some listed companies having the lower variation limit set at 25%.

BET Index has fallen by 11.76%, ROTX Index was down by 11.99%.

The most significant decreases were registered by the shares of Banca Transilvania (-18.38%) and BRD (-15.87%).

BVB has opened on Wednesday in decrease after the fiscal decisions announced Tuesday evening by Finance Minister Eugen Teodorovici.

The BET Index was down by 6.78%, while BET-TR Index, which reflects the development of most liquid 10 shares listed with the BVB, was down by 6.92%.

The BET-FI Index, made up by Proprietatea Fund (FP) and the five SIFs, was down by 3.87%.

Banca Transilvania – down 15%, BRD – down 10%, Romgaz – down 10%, Petrom – down 5%.

At 14.20h things have already gone very wrong.

The BET Index was down 11.83%, losing the entire advance during 2018. SIF Banat Crisana was down 14.98%, OMV Petrom down by 13.5%.

The steepest fall was registered by Banca Transilvania: -17.62%, followed by SIF Banat Crisana -14.98%, Oltchim -13.89%, Patria Bank -14.61, OMV Petrom -13.54%, Electrica -13.51%, Electroputere -12.5% and Alro -11.51%.

BVB: Local capital market enters a zone endangering the future development prospects

A release from the Bucharest Stock Exchange issued on Wednesday reads that the local capital market has entered a zone that could endanger the future development prospects, including the expected promotion of the BVB to the statute of emerging market.

“BVB has taken note of the negative effects reflected in important decreases of the stock exchange indices, following the draft GEO announced recently by the Government. The local capital market, which includes Romanian companies representing more than 10% of Romania’s GDP, has entered a zone endangering the future development prospects, including a possible promotion to the statute of emerging market. The investors follow closely the political decision-makers actions which influence the economic environment and the development of the listed companies, a major issue within the investing process being related to the legislative predictability and stability,” the release reads.

Finance Minister Eugent Teodorovici announced on Tuesday that banks will be differently taxed, according to ROBOR (Romanian Interbank Offer Rate). The higher the index is, the higher taxes will be, says the new tax, called “the tax on greed”.

The FinMin has announced this measure among other several fiscal measures envisaged for 2019, such as the EUR 10 billion investment fund, the decrease of taxes in constructions, but also the controversial decision to take the “vice tax”, which encompasses money normally intended for the investments in hospitals and to the big healthcare programmes to counter chronic diseases, and redirect it to the state budget to cover for the state employees’ salaries and for other expenses in the central administration.

He also announced the capping of the gas price for a three-year period: RON 68 megawatt/hour. The measure will apply until February 28, 2022.

In the case of Pension Pillar II: Funds can invest in public-private partnerships; administration fee drops from 2.5% to 1%; the second commission of 0.05% of the assets changes according to the fund’s performance; a person may withdraw the money, but not earlier than 5 years, and the withdrawal fee is 2% of the assets.