AFTER INVESTORS HAD LOST ALL HOPE, The SIFs make a show on the Bucharest Stock Exchange

• Analysts say the trend could continue in the short term, but they expect depreciations for the rest of the summer

After the market drop, the main indexes of the BSE gained considerably, posting figures which exceed the minimum thresholds reached in the beginning of the month. Financial rose the most and were the most liquid, due to volumes which were higher than in the first weeks of the month.

"Rising volumes could signify that investors are becoming more optimistic and starting to buy again, a situation which can persist for as long as foreign indexes remain in positive territory", said Nicu Grigoraş, broker with "Intercapital Invest".

According to analysts, the increases of the last two weeks come as fears that the economies of countries such as Spain and Greece could collapse.

Marius Pandele, the head of the research department of brokerage firm "Tradeville", explained: "There were several positive macroeconomic news published during this period, the Eurozone countries seem to have stabilized their situation, and negative news were absent most of the time. As a result, international investors were more willing to start buying again, which led to stocks rising and even to the successful sale of bonds by Spain, which would have been inconceivable two or three weeks ago. The Euro also recovered the losses it posted against the dollar these past few weeks".

The first signs of a slowdown in the downward trend appeared two weeks ago and were very obvious in the evolution of the markets during the last ten trading days.

Financials and banks ("BRD - Group Societe Generale", "Banca Transilvania") remained attractive to investors, being the most heavily traded.

Over the last two weeks, the five financial investment companies brought investors the highest returns over the last two weeks. Since the beginning of the month, the BET-FI index which tracks their stock prices, rose almost 20% from the lows recorded in the beginning of the month, whereas the appreciation of the BET Index, which tracks the ten most liquid stocks, increased 8%.

The evolution of the domestic capital market was heavily influenced by the evolution of the foreign stock markets, a situation which will persist in the future, analysts say.

"Apart from the foreign factors, Romania has its own two major dangers knocking on its door: if public sector pensions and wages are cut significantly, there is the possibility of a drop in tax receipts and the GDP, whereas, if they remain at their current levels, the Romanian state could default", said Marius Pandele.

• Analyst predictions for the summer of 2010

The evolution of the stock market will remain volatile for the following months, with analysts predicting short term rises, and drops in the medium to long term.

Marius Pandele, head of the research department of "Tradeville", considers that the outlook remains predominantly negative for this summer.

He explained: "Until and the first months of 2010, the main argument used against a rise in stock market, were the fact that it had already risen significantly and the lack of a correlation between the economies which were very slowly recovering from recession and their respective stock markets. There are now more alarming factors, there is a perspective of a new wave of the crisis, which makes me believe that we could see further depreciation on the equity markets".

Nicu Grigoraş said that all the investors are waiting for the publication of the earnings announcements by manor Wall-Street companies, as well as the macroeconomic results of the American economy for the second quarter.

"Depending on how these earnings reports will be perceived, the current raises will continue into the end of the summer or will fade away", he said, adding however that domestic macroeconomic issues remain difficult and investors need to carefully watch the evolution of the economy in the coming months.