The BET, which is a representative index of the Bucharest Stock Exchange, dropped 0.04% on Tuesday, marking the tenth session of decline in a row, for the first time since 2003.
The decline is thought to be due to the fiscal uncertainty. Companies have no idea how wages will be calculated next year, if social security tax expenses increase or not and the attacks on the mandatory private pension system (Pillar II) affect the investors’ perception.
The three-month Robor rate, a reference rate for most leu-denominated loans, was up to 1.87% on Tuesday, despite Romania’s central bank intervening with a 4.1 billion lei (EUR892 million) repo auction, the fourth in October alone. An analyst sees Robor at 2% at the end of the year and a pessimistic voice says it will go up 5% in the next six months.
The exchange rate fluctuates at 4.59 lei to one euro, only a few steps away from 4.6 and an analyst even sees it up to 4.8 by yearend, which is just two months away.
The most pessimistic capital market analyst expects the BET to drop 10% in just two months, another says a concrete impact will come from the future of the Pillar II pension funds, which are the most active stock market investors, while a third says it will increase by about 2%.
A gloomy and harsh overview of the current situation of Romania’s economy, if looking at some fundamental pillars: the stock market downward trend, loan interest highs and a leu/euro exchange rate that could reach 4.6 points to the euro, unparalleled since 2012. Where do all these things come from and what’s next?
“The wrong fiscal and wage policies on the part of the government, tax hike expectations and legislative uncertainties, they all have a negative impact on the growth potential of the market in Romania,” explains economic analyst Dragos Cabat. The cut of the contributions to the Pillar II pension system only served to lower expectations about the growth potential of the Romanian market even further, he added. (EUR1=RON4.5985)
(English version by Loredana Fratila-Cristescu)