BVB: Index growth took a break

Indices of the Bucharest Stock Exchange (BVB) were mostly down in October, in line with the decline of international markets, which appeared in a climate marked by rising government bond yields, the outbreak of the conflict in the Middle East and financial reports related to the third quarter of of the year.

The BET index, of the twenty most liquid stocks on the BSE, depreciated by 0.83% to 14,218 points, a move that, for the time being, equates to a break in the upward trend of our market's main stock basket since the second part of last year. The BET-BK index, the yield benchmark of equity investment funds, fell by 0.15% in October, while the BETAeRO index, of companies in the BSE Multilateral System, declined by 1.97%, last month.

Yesterday, the BET index reached a new historical record of 14,577 points, after an increase of about 2.5% in the first days of November.

• The yield on 10-year US Treasuries rose to 5%, a level not seen since 2007

In the United States, the main indices recorded their third consecutive month of decline, with the S&P 500 down 2.2%, while the Nasdaq Composite, of knowledge-intensive companies, declined 2.78%. The setback occurs in conditions where the yield on government bonds has grown strongly, with ten-year bonds reaching 5% in the middle of the month, a level not reached since 2007. The results of the companies, which refuted the most negative scenarios, were somewhat mixed and did not had the force to pull the stock quotes. In addition, even if it did not have an obvious impact, the war between Hamas and Israel probably brought fears to the markets about the risk of the conflict expanding, with more severe implications for the markets.

On our side of the Atlantic, where the European Central Bank left interest rates unchanged after ten consecutive hikes, but stressed that "talk about cuts is completely premature", the Stoxx 600 index fell 3.68% in October, while in Frankfurt, the DAX40 depreciated by 3.75%.

• FP, BVB and BRD shares - the best developments in the main share basket of our exchange

At the Bucharest Stock Exchange, where only a few companies presented their results obtained in the third quarter, the decreases were more mitigated, thanks to specific elements that influenced the evolution of the price of the securities of several issuers. Overall, the BET-XT index, which reflects the dynamics of the thirty most liquid stocks on the BVB, had a 0.83% decline last month.

Fondul Proprietatea (FP) shares rose by 16.67%, in September, to 0.49 lei, by far the best evolution in BET, against the background of the announcement regarding the launch of a public buyout offer at the price of 0.6319 lei, much more than the market one. Initially, the Fund submitted the documentation for the redemption of about 12% of the capital, but later supplemented the offer up to almost 30% of the company. For now, ASF has not approved the offer increase, which will take place until December 5. Also last month, the Fund announced that it collected 650 million lei from the sale of holdings in the companies of the Enel Group, money that will be used to reduce the discount between the price and the Net Asset Unit Value (NAV).

BVB shares rose by 6.99% last month, in a continuation of the upward trend that started about a year and a half ago. Apart from the listing of Hidroelectrica, the impact of which can be seen in the results of the third quarter, the elections for a new Council on November 22 are a factor that explains the increase in the share price. According to our sources, seventeen candidates have applied for the nine places on the board of our scholarship.

Shares in BRD rose 4.48% last month before the bank released its third-quarter (or first nine months) results and dividend proposal. BRD proposed the allocation of an amount with a return of around 5%, and for the period January-September 2023, the credit institution reported a net profit of 1.2 billion lei, up 19% compared to the first three quarters of the year last. Banca Transilvania (TLV) shares ended the week up 0.7%, thus overcoming the 4% ex-dividend correction from October 20. The credit institution will present its results for the third quarter on Friday.

• BET-NG, the index of energy and utilities companies, declined 3.4%

In a month in which Brent crude fell by around 7%, the share price of OMV Petrom ( SNP ) fell 5.96%, as the company reported a net profit of 1.6 billion for the third quarter lei, down 64% compared to the same period in 2022, which was nevertheless an exceptional year.

Nuclearelectrica (SNN) shares depreciated by 6.76%, in October, without an obvious fundamental reason, while Hidroelectrica (H2O) shares fell by 2.75%, to 116.7 lei, a price that is still well above the one at which the public offer ended in the summer, of 104 lei. Under these conditions, the BET-NG index, of energy and utility companies, had a 3.38% decline last month, the biggest drop among the BSE's share baskets. In terms of declines, the titles of the manufacturer of construction materials

TeraPlast (TRP) were also noted, which fell by 4.8%. The company reported a nearly 60% decline in profit in the first nine months of the year, but for the third quarter it reported an acceleration in business, and the profit made reversed the loss recorded in the middle of the year.

• 68% trading discounts for Lion Capital and Infinity Capital Investments

The BET-FI index, of SIFs plus Fondul Proprietatea, rose by 3.1% last month, thanks to the evolution of FP shares. At the end of the month, the SIFs traded at discounts between the price and the Net Asset Unit Value (VUAN) located between 68% for Lion Capital and Infinity Capital Investments, while the SIF Muntenia securities had a relative difference compared to the asset level of 46%. In the case of FP, the discount was 24%, but the fund is repurchasing its shares at a price only 2% below the last unitary net asset, of 0.6447 lei.

• A new issue of Fidelis government bonds has been listed on the BSE

The last offering of Fidelis government securities intended for the population entered trading on the BSE last month. During the operation, the Ministry of Finance collected 535 million lei and 191 million euros, the securities having interest rates between 6.25% and 7.25% for issues in lei, respectively 3.9% and 5.3% in the case of in Euro.

In October, the average daily value of transfers with securities listed in the Regulated Market amounted to 137 million lei, 50% more than in September, as shown in the BVB Monthly Bulletin. With transactions of 371 million lei, H2O shares occupied the first position in the circulation top last month, followed by TLV titles, which accumulated transfers of 224 million lei. The podium is completed by exchanges with FP securities, which amounted to approximately 165 million lei.

At the end of last month, the market value of all companies listed on the Main Segment of our capital market (including Erste Group Bank) was around 272 billion lei, slightly below that recorded at the end of September, according to the BVB monthly bulletin.