Back from their short holiday, investors crushed the stock market

• The BET-FI index is back to its 2009 levels

• Răzvan Paşol, "Intercapital Invest": "Investors are coming to grips with the fact that exiting the crisis will take longer than they expected"

The Bucharest Stock Exchange yesterday had one of the worst days this year, after a mini-holiday when investors couldn"t trade, even though the foreign markets were active. The stock indexes closed down sharply, stemming from the state of panic which set the tone yesterday.

The BET-FI index, which tracks the five financial investment companies, posted the steepest drop, of almost 14%, to 18,008.26 points, its July 2009 levels. The BET index, of the ten most liquid shares on the BSE, yesterday dropped 10.96%, closing at 4,365.99 points, while the composite index BET-C, reached 2,658.23 points, losing almost 10% compared to the previous session. Transactions with SIF5 "Oltenia" stock accounted for almost one third of yesterday"s turnover.

"It is becoming obvious that we are not dealing with a simple correction this time", says Răzvan Paşol, the head of brokerage firm "Intercapital Invest", who says yesterday"s drops were caused by the evolution of the global economy.

"The stock market has been rising over the last year on the hope of improving chances of exiting the crisis. In other words, investors" outlook on the evolution of the global economy was positive. However, what has been happening over the last weeks (Greece"s issues, the nationalization of a Spanish bank and the questions over the future of the Eurozone) showed that the exit from the crisis will take longer and will be more painful than expected. Furthermore, we now have problems which are beginning to surface in other countries, and investors are concerned which country could be next after Greece... there has been too much optimism and now stock prices are beginning to adjust. What happens on the BSE matters less, what is important is what"s happening on the foreign markets", said Paşol.

Of the shares of the regulated market, only two closed in the green, while the rest dropped sharply. "Cemacon" Zalău lost 14.91%, dropping to 0.0971 lei/share. Shares of "Siretul" Paşcani (symbol:SRT), COMCM Constanţa (symbol: CMCM), "Oil Terminal" (symbol:OIL) or "Electroputere" Craiova (EPT) also lost more than 14%.

"Of course we can call it a panic when we see drops of more than 7% that have no connection to the underlying state of the companies", says Mihai Chişu, broker at "IFB Finwest". In his opinion investor sentiment now rules the market: "Market sentiment can shift 180 degrees from one week to the next. People who were wondering six weeks ago how high the SIFs would go, are now wondering how low they will go ...The market behaves chaotically when we see unexplainable 15% drops. The downward trend is now becoming increasingly clear, many investors got scared and they are beginning to sell".

Yesterday"s turnover amounted to almost 70 million lei (EUR 16,65 million). The most actively traded stocks were SIF5 "Oltenia", SIF2 "Moldova" and SIF3 "Transilvania".

"There were moments when the SIFs and Petrom (symbol:SNP) were left with no buyers", Andrei Petrescu, portfolio manager at "Prime Transaction" said yesterday. He added: "The reason behind yesterday"s drops was caused by the combination of several negative events - the tensions between North and South Korea, the correlation with the foreign markets and the revisions of the growth outlook for the Romania economy. Whereas in the beginning of the year we still had hope for a growth of 1%, in 2010, we are now coming to the realization that we will most likely have a drop of the economy".