Most local companies are traded at P/BV indicators (stock exchange price considered against the net asset per share), which are lower than the indicators of similar companies in Europe, thus having a higher growth potential.
Also, some of the local companies are more attractive in terms of the P/E indicator (share price relative to the company’s net profit per share).
In the case of both indicators, the lower the value of the share relative to the sector’s average, the higher its growth potential.
“Romanian shares are more attractive in the long run than shares in developed countries thanks to the economy’s growth potential. At the same time, investing on a frontier market, such as Romania, entails much higher social, economic and political risks than developed markets do. In a recession, shares in countries like Romania are expected to decline harder than in developed countries, but as the economy progresses, they could recoup their losses and even generate higher than average profit,” explains Ovidiu Dumitrescu, analyst with brokerage firm Tradeville.