A Stock Exchange standing on the legs of the government

The kindness of the government when it comes to privatizations has led to the increase of the performance of the Bucharest Stock Exchange, without the market having displayed any improvement in its attitude or in its strategy.

A progress is visible if we look comparatively at the ratios of the BSE, in the first eight months of the last five years. But the Bucharest Stock Exchange isn't able to succeed on its own.

On the contrary, the attempted IPO of AdePlast saw a notorious failure, when it is precisely from that direction that the Stock Exchange should have expected support and encourage the listing of private companies.

On the contrary, AdePlast was a bad example, which has discouraged entrepreneurs from getting listed on the Bucharest Stock Exchange and raising capital from the market.

If we add to that the unfortunate incident of "Harinvest", then the market of the Bucharest Stock Exchange has also lost some of its trust, driving away potential investors.

The two major types of clients on any securities market are issuers and investors. The latter, however, the BSE has driven away, indifferently, because its ratios have improved with the help of the government.

This year, the government took "Electrica" public, after it listed "Nuclearelectrica" and "Romgaz" on the Stock Exchange.

Aside from the contribution of the state, the Proprietatea Fund has helped the turnover of the Bucharest Stock Exchange, through the buyback program, as well as through the sale of from its portfolio - 5% of Romgaz and 15% of Transelectrica.

Moreover, in February, the Financial Oversight Authority has allowed the SIFs to hold stakes in each other, a decision which led to significant trades on each of these issuers.

Another lucky break for the BSE was the fact that the markets in Qatar and the United Arab Emirates were promoted from the frontier market to the emerging market status, which left room for the increase of the weight of Romanian stocks in the MSCI Frontier Markets 100 index.

The five Romanian companies currently included in the MSCI Frontier Markets 100 are Banca Transilvania (TLV), OMV Petrom (SNP), Romgaz (SNG), BRD - Groupe Societe Generale (BRD) and Transgaz (TGN).

Their weight in the index, has already increased, starting with the month of May, to 2.4% and will increase to 3.38% by November 2014, according to the estimates of the BSE.

With all of these stimuli, the BSE has seen trades amounting to 9.08 billion lei, in the first eight months of 2014, up 67% YOY. However, the volume of trades was just 7.9% higher, (8.22 billion shares), between January - August 2014.

The daily trading volume on the Bucharest Stock Exchange has remained constant trend in the last five years, even though the BSE changed several chairmen in that time. The fluctuations from one year to the nest are mostly caused by circumstantial trades - IPOs, "deals".