“Clearly the Romanian pension funds have become one of the main pillars of the Bucharest Stock Exchange. This comes with advantages for us all because the average people can benefit from the long-term growth of the stock market through the pension funds,” says Adrian Cojocar, deputy general manager of Patria Asset Management.
The strategy of the managers of those funds is to accumulate shares and not actively trade on the stock market, which translates into a decline in the shares available for trading and could lead to a drop in liquidity.
Such funds receive inflows of cash periodically; for instance, they got 4.14 billion lei (some EUR900 million) from the contributions of the 7.4 million Romanians in the first half of 2019 alone, according to Romania’s Financial Supervisory Authority (ASF) data.
Since the supply on the stock market is limited, and pension funds receive inflows of cash, who does them getting bigger and bigger every day benefit and who does share accumulation hurt?
“The only downside I can see is that the accumulations of the pension fund reduce the free float of companies and implicitly the liquidity of the market may drop. However, 10% to 20% of capitalization is a reasonable percentage,” Adrian Cojocar says.
Marcel Murgoci, trading manager of Estinvest, believes that with the increase in their stakes, the pension fund managers could become more involved in the operations of the issuers, going as far as to secure one or more seats in the boards of directors of the respective companies.
(English version by Loredana Fratila-Cristescu)