The BET index of the ten most liquid companies listed on the Bucharest Stock Exchange ended August with a 7.96% drop, which makes it the slowest August for stock market investors since 2011.
OMV Petrom (SNP.RO) dropped 12%, the steepest decline of all the BET index components, while Electrica (EL.RO) rose by 0.8%, the highest increase in the BET.
The regional investment fund SIF index BET-FI dropped 6% in August. The market capitalization of the listed companies fell to RON142.2 billion, so the stock market is now down by more than 1% compared with the beginning of the year.
“Foreign investment funds dominated sale positions on the Bucharest Stock Exchange in August, while local institutional and retail investors did the buying,” said Valerian Ionescu, BCR’s trading manager.
The local stock market posted the worst decline of all markets in the region in August, as the stock market in Poland fell 2.8%, Hungary’s dropped 5.7% and Czech Republic’s 0.7%.
Most of the August decline was caused by the panic that affected the markets of the world on August 24, a day to be remembered as the Black Monday. The Bucharest Stock Exchange lost 6.3% on that day on a record traded volume of more than EUR28 million. The panic was fueled by the abrupt decline of the Chinese stock market and by the expectations that Fed would soon hike the interest rate for the first time in a decade.
“Following the recent declines, many Romanian shares are looking good at their current quotes but it is hard to say exactly when the investor sentiment changes,” said Adrian Cojocar, general manager of asset manager Intercapital Investment Management.
After almost four years of constant growth, during which the Bucharest Stock Exchange tried to offset the severe losses caused by the 2008 crisis, the trend in August indicates how volatile and unpredictable the stock market can be. The stock market is proven to provide better yields than bank interests on long term but investors have to be able to stomach the short-term shocks. (EUR1=RON4.4390)
(English version by Loredana Fratila-Cristescu)