“The whole stock market has been going down since the beginning of the year, but SIF shares fell more than the energy sector stocks because they have weaker fundamentals and investors realize SIFs cannot book profits unless they sell some of their bank stakes,” said Mihai Caruntu, head of the research department of Romania’s largest bank BCR.
The BET-C, which tracks the performance of the entire Bucharest Stock Exchange, has gone down 5% since the beginning of the year, while the shares of the five SIFs have lost 8.4% on average.
SIF Transilvania saw the highest decline, about 18%, followed by SIF Banat-Crisana, 10%. Both companies have recently announced they would not be the paying any dividends this year. In SIF Banat-Crisana’s case, this did not come as a surprise, because it did not pay any dividends last year, either.
The announcement of SIF Transilvania, however, which paid the highest dividends, 190 million lei (EUR42 million) last year, that it would not disburse any dividends but bonus shares up to RON100 million in a capital increase caused dissatisfaction among shareholders.
The decline of SIF Banat-Crisana shares was also due to the company not revealing investment plans and plans for the 2013 profit to investors. On the other hand, the SIF Transilvania share price is in line with the downward trend of its net assets, BCR’s Mihai Caruntu said. SIF Transilvania sold significant stakes in banks, then put almost its entire profit into dividends and its assets went down. The sale of stakes these funds have held for a long time and the distribution of almost the entire profit is not a sustainable thing for SIFs, the analyst added.
SIF Moldova (SIF2.RO) has dropped 9% since the beginning of 2014, even though it has recently announced it would pay 38% to 45% of its profit as dividends. It allocated 90% of its profit for dividends last year and the profit was higher back then, which means this year’s dividend will be more than three times lower. Investors seemed not happy with this announcement, as SIF Moldova shares lost 2% on Thursday.
SIF Oltenia (SIF5.RO) saw a 2.5% decline since the beginning of 2014. After a dispute with one of the largest shareholders, the SIF chairman, Tudor Ciurezu, proposed shareholders to pay RON92.8 million in dividends, or 71% of last year’s profit.
The company made RON130 million profit in 2013, largely from the sale of a 28.5% stake in pharmaceutical producer Biofarm (BIO.RO). The SIF had bought the Biofarm shares from the stock market, it had not received them from the Romanian government upon establishment.
SIF Muntenia (SIF4.RO) was the least affected this year, having dropped merely 0.7% .The trend of its shares was influenced by the deal whereby SIF Banat-Crisana bought 4.99% in it.
SIF Muntenia gave shareholders a choice: either have the entire net profit added to reserves and no dividends paid, or get 85% of the profit as dividends (a total of RON111.37 million lei). Considering SIF Banat-Crisana owns 5% in SIF Muntenia and is not paying any dividends this year, it remains to be seen what shareholders will decide in their general meeting on April 14. (EUR1=RON4.5069)
(English version by Loredana Fratila-Cristescu)