Brokers’ opinions on stock exchange performance in 2012 are divided, however most believe it will be a year full of challenges, that last year’s declines could be pursued this year, so they mainly recommend shares in defensive sectors, which can perform well even under the difficult market circumstances expected for this year.
But the shares recommended by brokers and analysts also include companies that can offer high dividend yields, which were the most in demand during the crisis.
“I believe the stock exchange is more likely to decline next year. Because of the low liquidity, our market will be completely off the radar of foreign investors” says Rares Nilas, general manager of brokerage firm BT Securities. According to him, the only company with a chance of ending the year on the rise is Fondul Proprietatea, if it becomes visible again.
He says the fund’s shares are stable and that listing the fund on another market would probably reduce the discount at which it is currently traded.
Nilas expects 2012 to be an extremely volatile year and says the Bucharest Stock Exchange (BVB) will continue to lose ground to mature stock exchanges.
“I think average daily liquidity will be below EUR5 million this year. The current Board of Directors doesn’t seem to have any solution to ensure the survival of the market,” he adds.
Iulian Panait, president of KTD Invest, says 2012 will be the year of the exit from the crisis, but it is difficult to say when exactly the stock exchanges will rebound.
“In theory, 2012 should be the year of the exit from the crisis, but this is more likely to occur in the second half.”
He says the economies in the region have stabilized, cost cuts have been made in the public sector, and the rebound of stock exchanges depends on the sovereign debt crisis.
“What has recently been discussed at the (EU) summit is a good direction, but markets don’t seem to be happy yet. I think the crisis will be resolved if they persuade the European Central Bank to buy bonds or if they persuade the Germans to issue Eurobonds,” Panait says.
Other brokers believe 2012 will not be the year of the stock exchange rebound.
“2012 is likely to be a poor year on the stock exchange,” believes Mihai Chisu, broker at IFB Finwest. He says the Bucharest bourse rebounds when domestic circumstances are favorable or when there is interest from foreigners, but this is not the case at present.
“The only things that could generate some interest are the state’s offerings and the SIFs’ cap,” he adds.
He would bet on the shares that will pay the highest dividends, such as Transgaz (TGN.RO), Fondul Proprietatea and OMV Petrom (SNP.RO).
“The SIFs could also come with pleasant surprises in terms of the dividend yield after collecting significant amounts from Erste.”
Chisu believes though, that after a good start of 2012, problems will re-emerge in Europe. “Overall I think it will be a year of testing the water, just as 2011 has been,” says Chisu.
Alin Brendea, operations manager at Prime Transaction, believes in 2012 the stock exchanges will stabilize, but does not expect major increases.
“This year (in 2011 i.e.) we experienced very uncertain times and unfortunately this will extend into 2012,” says Brendea.
Brendea expects a stabilization of the stock market, i.e. an end to declines thanks to prospects of putting the crisis behind, but he doesn’t believe in spectacular positive evolutions for 2012.
“It will be important if even two offerings of those the government plans for 2012 materialize,” says Brendea.
In 2012 he favors shares in safer, defensive sectors, such as the energy and utility companies, as well as Fondul Proprietatea.
The president of KTD Invest would also invest in defensive sectors.
“I think Transgaz shares will perform well because they are in the energy sector and consumption doesn’t show signs of declining. The same is true of Petrom because we are dependent on fossil fuels and the oil price remains high.” He says Condmag, Prospectiuni and Dafora have won some contracts, so they should also perform well.
“I think Oltchim shares will rise when its privatization occurs, which I think will happen later this year.” Banks are at their most vulnerable at this point of the crisis and the SIFs’ performance will depend on banks’ performance.
“The shares of Fondul Proprietatea will rise next year, as well, because the state made its exit. The funds have had their fill, so I don’t see who could sell, but there could still be buyers interested,” Panait says.
(English version by Daniela Stoican)