However, the Bucharest stock exchange management hopes 2016 will see the local market be promoted to an upper league.
At present, the Bucharest bourse is in the third division of world exchanges, namely in the category of frontier markets.
Promotion to the second division, of emerging markets, is likely to bring capitals of over 1 billion euro on the domestic market.
MSCI indices are tracked by investors and funds with assets of $7,000 billion.
MSCI includes the Bucharest bourse in its frontier market index, namely MSCI Frontier Markets Index. The index is watched by investors with assets of $12.4 billion. Should Romania be promoted to the MSCI index of emerging markets and get to weigh just 0.1% in the MSCI Emerging Markets index, this would mean new potential investments of $1.4 billion (some EUR1 billion) on the Bucharest exchange.
Promotion to this league would automatically catch the eye of investors with assets a hundred times bigger, of better quality, and not speculators, but longer-term investors.
“We are aware of the events that took place last year on the Bucharest bourse. The listing of Romgaz and Nuclearelectrica is a good thing. However, there is no proposal now from the part of MSCI for placing Romania on the shortlist for promotion to the emerging market category in June 2014,” Lieblich told ZF.
Promotion to an upper league of stock markets is a lengthy process. “Next July, if investors agree, we will announce the market will be upgraded and upgrading will take place one year later,” the MSCI director said.
Asked when the local market can be promoted by MSCI, Ludwik Sobolewski, chief executive officer of the Bucharest stock exchange, answered: “It takes time, because MSCI must be sure a change (an upgrade) is irreversible. In practice it means that we have a chance to be put in the watch list in around June 2015, and hence be reclassified not earlier than in mid-2016. Mid 2014 is not possible, even if we remove very rapidly the barriers to market access, because it is very unlikely that we will have reached the size and liquidity criteria”.
Market size and liquidity are currently the big issues of the Bucharest exchange.
The Bucharest bourse’s executive underlined that the listings of Romgaz, Hidroelectrica and of other companies can propel the domestic market to the league of emerging markets.
For promotion to this league, the bourse has organized a work group due to publicly present a plan of action by the end of January, according to Sobolewski.
While the Bucharest bourse stands low chances of entering MSCI’s watch list in June 2014, Sebastian Lieblich says this is not necessarily a bad thing as frontier markets will gain even more attention from international investors this year.
(English version by Catalina Apostoiu)