The index of energy and utilities companies listed on the Bucharest Stock Exchange goes up while volatility intensifies

International capital markets are going through a period of significant volatility, and the Romanian capital market has aligned itself with this trend. Rising interest rates, geopolitical tensions, and persistent inflation are some of the factors behind these fluctuations. The increase in volatility has resulted in significant spikes in liquidity on the Bucharest Stock Exchange (BVB). The trading value for all types of financial instruments increased by 67% in the first 4 months compared to the same period last year and reached RON 9.15 billion (EUR 1.85 billion). The monthly evolution of this indicator can be seen in Graphic 1. The average daily liquidity with all types of financial instruments listed on the BVB Regulated Market was RON 111.65 million, the equivalent of EUR 22.6 million, up by over 70% compared to the first four months of last year.

In line with international market movements, most BVB indices ended the first four months in negative territory. In the last trading session from April, the BET index – which includes the 20 most traded companies listed on BVB – displayed a value of 12,723 points, or 2.6% below the level at the end of last year. The BET-TR index, which also includes the dividends granted by BET companies, ended April at a level of 22,970 points, or 0.6% lower than at the end of 2021.

A positive evolution was registered by the BET-NG index, which reflects the evolution of the companies listed on the regulated market of BVB that have the main field of activity energy and related utilities. BET-NG increased by 5% in April, having the highest growth rate compared to all other BVB indices.

„The best investment in the face of inflation or volatility is the investment in education. The most frequently asked questions in the current context refer to the best types of investments in terms of an inflation rate of nearly 14% or more pronounced daily fluctuations in the capital markets. Investing in financial education offers the best long-term return for both individuals and companies. We welcome the decision of the Romanian Parliament to approve the law on withholding taxes generated by capital gains for individual investors and differentiated taxation of profits made depending on the holding period. A developed Romania needs a strong stock market with as many Romanian companies as possible and wide involvement of the population in the investment phenomenon”, said Radu Hanga, President of the Bucharest Stock Exchange.

„The energy sector, strongly represented at BVB, has a significant impact on the economy. Romania has a privileged position in this field and that is why it is essential to exploit the potential to sustainably develop this sector in order to consolidate a significant long-term competitive advantage. For the population, simplifying access to the capital market is one of the best news as it encourages participation in the investment phenomenon and removes a number of bureaucratic barriers. The legislative proposal adopted by the Romanian Parliament, supported by BVB, allows much easier access for as many participants in the capital market and is an incentive for Romanians to place their savings on the local stock market”, said Adrian Tanase, CEO of the Bucharest Stock Exchange.

The legislative proposal to simplify the taxation of capital market investors was supported by the Bucharest Stock Exchange, the Financial Supervisory Authority, the Association of the Fund Administrators in Romania, the Romanian Association of Banks, and the Brokers’ Association. The bill provides for withholding tax on capital gains for individual investors to be retained at source, with two tax levels, i.e. 1% for holdings over one year and 3% for holdings of less than one year, while losses won’t be compensated. The obligation to calculate, withhold at source, declare and pay the tax will fall on the intermediaries and fund managers. The law would enter into force on January 1, 2023, after being promulgated by the President of Romania and published in the Official Journal of Romania.

The market value of the Romanian companies listed on BVB reached at the end of April RON 143.7 billion, the equivalent of over EUR 29 billion. Romania has become increasingly visible internationally and has been present, since March 21^st, with 11 companies in the Russell FTSE index dedicated to emerging markets. The 11 companies are: Banca Transilvania, Nuclearelectrica, OMV Petrom, TeraPlast, One United Properties, MedLife, Transport Trade Services, Purcari Wineries, Conpet, IMPACT Developer & Contractor, and Sphera Franchise Group.

The first four months brought to BVB a total of 17 new listings of issues of shares and bonds. In the equity segment, 7 companies came to the stock exchange: Holdingrock1, DN Agrar, ABN Systems, Dr. Fischer Dental, Grup ?erban, Bento, Brikston Construction Solutions. In the bond segment, 10 bond issuances took place: Elefant Online, Stanleybet Capital, Life is Hard, Inox, BCR, The Ministry of Finance (with 4 issuances), and the Municipality of Bucharest.