Some believe the stock market will pick up, while others believe declines are far from being over.
Volatility is still at its highest on stock markets. Since the start of the year, BET, the benchmark index of the BVB, has lost 10% mainly on the steep corrections suffered over the past month. In August alone, the index lost 11.6%. What do these declines indicate: an extremely attractive market for acquisitions or the beginning of an even deeper slump?
“I believe we have over 70% chances to see the Bucharest bourse end 2011 below the current level. There is no way we can see highs on the bourse in the months left until yearend. I believe we have entered a bear market,” said Marius Olteanu, executive manager with management company SIRA, which manages assets worth 4.1 million lei (almost EUR1 million), in two funds.
“Under these market circumstances, to shun potential declines, investors can partially sell stocks in the portfolio, but not chaotically, but according to a pre-established plan,” Olteanu also said.
Nicolae Pascu, president of management firm STK Financial, which manages fund STK Emergent, believes the downward trend is about to end.
“The declines we’re witnessing these days are in fact signs that markets are trying to find a balance. After the current wave of declines peters out, I believe the stock market will pick up. Though this is not the only possible scenario, I expect the Bucharest bourse to end the year in the black,” said Pascu.
STK Emergent, listed on the BVB, posted a 1.7% loss in July. Despite the negative performance, Pascu still opts for a buy hold strategy. “I believe the best strategy is the one seeking value, and not the trend, which involves going against the trend and buying cheap stock in major companies,” said Pascu.
(English version by Catalina Apostoiu; Editing by Ioana Tudor)