15 MILLION EUROS ADDED TO THE TURNOVER OF THE BSE Last minute trades with shares of the SIF and the Proprietatea Fund

It seems like on Friday, someone yelled "Ready, Set, Go!", as just one minute before 15:00, the BSE received orders for four "deal" trades, involving 0.37% of the Proprietatea Fund, 1.41% of SIF4 "Muntenia", 0.85% of SIF5 "Oltenia" and 0.5% of SIF2 "Moldova". These trades significantly boosted the turnover of the exchange, by almost 15 million Euros, of which the Proprietatea Fund accounted for 9.64 million Euros.

The parties involved in these exchanges remain unknown, for now. The BSE did not post any report concerning the sellers or the buyers of the negotiated deals which occurred on Friday, and it is possible that it won't do it later either, if no insiders were involved.

Some market voices consider that the exchanges were made between investment funds, perhaps even between funds owned by the same management company. Some voices are saying that there are new investors that are building their portfolios, whereas other tend to believe those deals had Franklin Templeton behind them, as a possible seller.

The trades came as the legislation concerning the SIFs is expected to see amendments in the beginning of this year.

At the end of last year, Mircea Ursache, the vice-president of the stock market division of the Financial Oversight Authority, proposed the amendment of the maximum holding limit of the SIFs and the BSE and allowing the SIFs to hold stakes in each other.

What was interesting in Friday's session was that the prices of the "deal" exchanges were down compared to the reference prices (-1.36% for the Proprietatea Fund, -1.57%, for SIF4, -1.30% in the case of SIF5 and -0.07% in the case of SIF2). However, the shares of SIF1 Banat-Crişana and SIF3 Transilvania, which were not the object of "deal" trades, gained 1.45%, and 0.97% respectively.

Aside from the story that most market participants agree on - that the negotiated trades were initiated by funds, there are some voices saying that 2014 is an electoral year, and when that kind of political events are getting near, they are also reflected in changes in the stock portfolios of some players.

Moreover, the NBR cut the policy rate from 4% to 3.75%/year on Wednesday, as well as the minimum required reserves of the banks for deposits denominated in lei (RMO) from 15% to 12%, and from 20% to 18% for deposits denominated in foreign currencies. Theoretically at least, the decisions of the NBR should favor the stock market. The interest rate cuts are spurring investors to seek alternative placements, and the Stock Exchange should do everything in its power to attract them. The cut of the minimum required reserves for Euros will release approximately 500 million Euros, and that of the minimum required reserves for lei will free up about 4 billion lei, according to NBR Governor, Mugur Isărescu. There are expectations that a portion of those amounts will be repatriated by the parent banks.

Lately, the National Bank of Romania has been showing increased interest in the stock market. The NBR is involved in the creation of a domestic Central Counterparty (an institution which is required by the EU regulations for the settlement of derivatives trades).