The record is set by packaging manufacturer MJ Maillis (MJM.RO), which recorded daily average transactions of just RON24, though an increase against last year, when transactions were zero.
The question that arises is what good are these companies, mere “extras” on the stock exchange? These shares, which are annual transactions amounting to just a few tens of thousands of lei per year, do not help the stock exchange or brokers make money. The companies themselves neither resort to funding, nor are they considered by investors.
However, almost all continue to be included in category II, although they don’t fulfill at least one of the conditions, namely having average daily transactions of over RON5,000. In the last few years, only one company was downgraded to category III, UCM Resita.
There are currently 78 issuing companies that feature in statistics of the Bucharest bourse (BVB.RO), the largest number in ten years. However, statistics on the value of stock exchange transactions since the beginning of the year reveal that 20 companies genuinely count when it comes to volumes, accounting for 97% of the market, while 30 are mere extras, with a cumulated value of transactions accounting for less than 0.1% of the total.
Most of the time, the extremely low liquidity of stock exchange shares is driven by two factors – the companies’ small size and the very low free float (number of shares available for trading).
For instance, oil services company Energopetrol Campina (ENP.RO) is the smallest on the stock exchange, with a RON1.84 million (EUR420,000) capitalization. Under the circumstances, it is normal for the volume of transactions to be one of the lowest.
In the case of large companies, such as steel maker Mechel Targoviste (COS.RO), pipe manufacturer TMK Artrom Slatina (ART.RO) and milling and bakery plant Titan Bucuresti (MPN.RO), the very low liquidity is explained through the low free float. For instance, in the case of Mechel, free float accounts for less than 0.5% of the capital. The free float of Artrom and Titan is below 2.5%. (EUR1=4.3529)
(English version by Daniela Stoican)