The strategic goal of those who run and operate on the capital market, Bucharest Stock Exchange, Financial Supervisory Authority, brokers and investors, is to have it promoted to emerging market status.
The move will put Romania on the map of funds with more than $1,400 billion in cash on their hands. Romania, with its Bucharest Stock Exchange, is currently rated as a frontier market and therefore only enters the radar of fundsthat are over a hundred times smaller.
“The Bucharest Stock Exchange can become an emerging market no sooner than 2017,” Ludwik Sobolewski said.
Besides barriers that have to be lifted, a series of technical pre-qualifying stages have to be completed first. The stock market, however, will see great benefits even before turning into an emerging market, because the first steps it will take towards qualifying as such will attract new investors and new capital inflows from the funds preparing for the market upgrade, Sobolewski added.
The main indicator that shows the readiness of the Bucharest Stock Exchange for turning into an emerging market is the daily traded value. It now stands at EUR7 million to EUR8 million and the target is EUR50 million to EUR70 million.
“To be relevant, the stock market needs daily traded volumes of EUR50 million to EUR70 million,” said Claudiu Cercel, deputy general manager of Romania’s second leading bank, BRD (BRD.RO). “To get to these figures we need a better infrastructure and updated regulations eliminating the (…) barriers. I hope we’ll get to these volumes in two or three years. I think we’ll become an emerging market before the economy joins the euro zone.”
To get to the emerging markets league and join countries like Poland, Russia, Brazil and China, Romania needs to eliminate a set of barriers in the legislation, to attract large company IPOs, to cut trading and regulatory costs and upgrade trading infrastructure, the participants to the ZF conference said.
(English version by Loredana Fratila-Cristescu)