The year 2011 started well for investors on the stock market. Proprietatea’s listing on January 25 activated investors and most shares saw significant increases in the first three months.
March also marked the official exit from recession, after Romania’s economy grew for the second quarter in a row. Investors had pinned their hopes on this rebound and blue chips like OMV Petrom (SNP.RO), BRD-Societe Generale (BRD.RO) and Banca Transilvania (TLV.RO) rose by more than 20%.
Investors had also hoped that the listing of Fondul Proprietatea and the stock sale offerings announced for Petrom (where the government tried to sell 9.84%) and Alro Slatina (ALR.RO), where the majority shareholder intended to sell 20%, would attract foreign investors’ interest.
Anyone buying stocks at the beginning of the year would have gained over 18% until mid-April, with a portfolio matching the BET index. Then the doubt started.
Greece’s problems were the first warning sign on international markets and all of a sudden investors became much more cautious. Money that had been plentiful on financial markets until then vanished overnight and companies planning to conduct public offerings had to postpone or even cancel them altogether.
Disaster struck in July: after Greece, Italy drew the attention of the market and all of sudden Greece’s debt problem became the debt problem of the entire Europe. Petrom’s offering failed and investors’ hopes were dealt a heavy blow.
Then the shock came. At the beginning of the August, rating agency Standard & Poor’s cut USA’s AAA rating and markets throughout the world plummeted. Afterwards, the US tried to pass the crisis over to Europe, and Europe tried to fix the problem. Dozens of meetings of European leaders, days and nights of negotiations, while investors were waiting for a verdict to come: will Greece default or will it not? Will the euro zone break up? Will banks be able to take this shock or not?
All these things affected the Bucharest Stock Exchange. Local investors withdrew from the market, foreign investors did not bring any more money and merely invested a bit in Fondul Proprietatea shares.
Oltchim and Azomures helped the market save face in a year when the shares of Petrom, the most profitable Romanian company, fell 16%, and Fondul Proprietatea’s have dropped by more than 33% since listing.
Oltchim was in the spotlight especially in the first part of the year when the talk about its privatization, included in the agreement with the International Monetary Fund, and disputes between the minority shareholders (PCC and Carlson Ventures) and the management of the company caused a surge in its stock quote. Oltchim’s share price therefore soared ten times until the beginning of July, when it lost some ground, due to poor results and a reduction in operations.
As for chemical fertilizer producer Azomures (AZO.RO), the trigger was the announcement of Swiss group Ameropa of negotiations for the plant’s takeover from its Turkish shareholders. Investors on the stock market immediately discovered the value of the company, which had posted record profits in the past year, and shares surged by almost 40% in one day.
On the other hand, the shares of construction company Concefa Sibiu (COFI), promoted to the first tier of the Bucharest Stock Exchange early in the year caused investors a loss of over 80%. At the end of November, majority shareholder Horatiu Cercel sold his stake to his father without providing any explanation, which caused a wave of Concefa share sales.
The end of the year brought the regional investment funds (SIFs) into the spotlight, once the talks about raising the ownership limit were resumed. Lawmakers approved raising this cap from 1% to 5%, but investors did not react that strongly to the news. SIFs stand chances of remaining in the spotlight next year as well, when the law should take effect.
(English version by Loredana Fratila-Cristescu)