On a market dominated by foreign investors, where state-owned company listings and Fondul Proprietatea (FP.RO) transactions are the main sources of liquidity, the biggest stockbrokers are betting on an increase in liquidity in 2014.
The small brokerage firms, however, are finding it more and more difficult to cope and go belly up one by one.
Securities firms brokered a 51% higher volume of transactions with shares last year compared with 2012, as the initial public offerings of state-owned companies and the private investments conducted by Fondul Proprietatea and the European Bank for Reconstruction and Development got the market moving.
Transactions with shares on the stock market amounted to 11.57 billion (EUR2.6 billion) in 2013, the highest level since 2007 and the daily average was higher than EUR10 million again. The increase in share prices contributed to the increase in liquidity, too, with BET ending the year 26% higher.
“The climate on the global (developed) financial markets and the satisfying performance of the local macroeconomic indicators created proper conditions for the stock market performance. The biggest gain is that Romania successfully attracted new investors, new money this year (2013 i.e.),” says Mihai Lazar, head of sales of Raiffeisen Capital & Investment, the securities firm of the Raiffeisen Group.
The firm climbed to the second position in the brokers’ 2013 ranking, with a transaction volume of RON3.75 billion, almost five times higher than in 2012 and 16.2% market share.
The ranking of stock brokers shows the market is becoming increasingly polarized, with several brokers among the top ten handling the big transactions and the smaller firms unable to benefit from the higher liquidity.
The four top brokerage firms and banks in the ranking accounted for two thirds of last year’s transactions. That was partly because of the exit of major players in 2012, such as ING and UniCredit, which left the transactions of international institutional investors in the hands of several brokerage firms.
Swiss Capital remained market leader and was also the only broker with a traded volume of more than one billion euros and an over 20% market share, even though it only took part in the floatation of Nuclearelectrica (SNN.RO) of all major transactions last year.
Raiffeisen, BCR, and Czech-owned Wood were involved in the biggest transactions, i.e. the listing of Romgaz (SNG.RO), the Transgaz (TGN.RO) offering, Fondul Proprietatea and EBRD’s investments in OMV Petrom (SNP.RO), so the three saw the highest increase in market share.
Most brokers expect a better 2014, fuelled by the IPOs announced by the governments.
“I think the daily traded volume will go up to at least EUR20 million this year, considering the new listings announced for 2014 and the additional liquidity of 2013. I hope the deregulation of the SIF trading and privatizations will make the Romanian market the most interesting in Eastern Europe. Everybody has got their eyes on us already,” said Bogdan Juravle, general manager of Swiss Capital.
Most top brokers are equally optimistic and believe a higher traded volume will come with higher prices.
“I am one of those who are optimistic about the potential of the stock market in 2014,” says Raiffeisen’s Mihai Lazar.
“We should definitely see an increase in volumes. I see an increase coming from the higher free float of the market, as a result the IPOs of state-owned companies and the sales of other large investors, such as Fondul Proprietatea,” said Valerian Ionescu, head of equity sales and trading at BCR.
“The interest in the stock market will not go away despite a slower start of the year.”
Despite the increase in the traded volume on the Bucharest Stock Exchange, the bottom line of the brokerage firms will not improve that much because the fierce fight over clients is pushing companies to cut fees.
The revenue of brokerage firms is down to one quarter of the 2007 level and many small and medium-sized ones have already gone belly up. Out of the 76 registered brokers in 2008, only 43 are still standing now and the trend will continue.
(English version by Loredana Fratila-Cristescu)