BVB indices remained afloat, in a negative international climate

The indices of the Bucharest Stock Exchange (BVB) had rather sideways developments in the third month of the year, in contrast to the declines of international markets, which reflects the predominantly defensive nature of the main companies of our capital market. The BET index, of the twenty most liquid securities on the BVB, depreciated by 0.04%, to 17,513 points, while the BET-BK index, the benchmark of return of equity investment funds, decreased by 1.44%, to 3,254 points. The end of the financial reporting season for last year, dividend proposals and companies' income and expenditure budgets were the internal elements on which investors focused their attention, in a general climate marked by the electoral period related to the presidential elections next month.

• US and European stocks fall amid uncertainty over US tariff policy

The main Western markets fell in March, in a context marked primarily by the White House administration's statements and moves regarding tariffs on imports to the United States, which generated fears among investors regarding inflation dynamics and global economic developments. The S&P 500 index fell 5.75% last month, while the Dow Jones index fell 4.2%. The Nasdaq Composite index, of growth companies operating in knowledge-intensive industries that are more sensitive to economic cycles, fell 8.2%. The declines occurred before April 2, the so-called "liberation day", when US President Donald Trump announced tariffs on almost all countries in the world, which caused a shock wave in financial markets. The White House later postponed by 90 days the application of customs duties exceeding the basic tariff level of 10%, except for China, this period being intended for trade negotiations.

On our side of the Atlantic, where capital markets had an evolution in the first quarter of the year above that of the markets in the United States, due primarily to the prospects of massive investments in defense and infrastructure, the indices had slight decreases. The pan-European Stoxx 600 index depreciated by 4.2%, while in London the FTSE 100 index depreciated by 2.6%. The DAX index, of the German market, had a setback of 1.7%, in a month in which the European Central Bank reduced interest rates by 25 basis points, to 2.5% on the deposit facility.

• Fidelis sets yield benchmarks for BVB investments

The main companies listed on the Bucharest Stock Exchange have concluded the season of preliminary financial reporting for last year and have submitted dividend proposals to shareholders. The banking and service sectors have had growing results, while energy producers have reported significantly lower results, but taken as a whole, from the perspective of turnover and profitability, the results were similar to those of last year, which shows the slowdown in our country's economy.

The state intends to again require that at least 90% of the profit of the issuers it controls be distributed in the form of dividends. On the other hand, the monthly issues of Fidelis government securities seem to set a benchmark for investors in shares on the BVB. Annual non-taxable interests exceed 7%, a threshold that dividend yields offered by companies are increasingly difficult to reach.

• MedLife, Sphera and Purcari - among the best developments in the BET index

Shares of the private healthcare provider MedLife appreciated by 7.94% last month, the best development in the BET, without obvious specific reasons. Erste recommended "accumulation" for the company's shares, with a target price above the market, according to the latest report published on the BVB Research Hub website. The issuer has a development policy through acquisitions and has budgeted revenues to increase by 9% and a net profit higher by 17% for this year, compared to last year.

Shares of Sphera Franchise Group, another company with a development strategy, but in an organic manner, had an increase of 5.54% last month. The operator of Pizza Hut, KFC and Taco Bell restaurants proposed the allocation of a dividend with a net yield of 2.3%, compared to the last share price in March, but in recent history the issuer has granted dividends twice a year. The company is on the radar of pension funds, and 2024 has proven to be a financially exceptional year for Sphera, which budgeted an 8% higher profit than the previous year. Shares in wine producer Purcari Wineries rose 4.3%, while shares in consumer goods distributor Aquila gained 3.24% in March.

• Banks estimate slightly higher profits this year, compared to 2024 results

BRD-Groupe Societe Generale shares rose 4.6% last month, while Banca Transilvania shares stagnated in March. BRD management proposed allocating 50% of last year's profit as dividends, equivalent to a 5.1% yield, and for this year it proposed to increase net profit in the upper single-digit range, compared to last year's result. In the case of Banca Transilvania, management proposed a dividend with a 5.4% yield and an increase in the institution's capital, an operation that involves the allocation of free shares, for every 1,000 shares held, an investor will receive 189 new shares, if the proposal is approved by shareholders. The institution from Cluj has budgeted a net profit for this year that is 11% higher than that of 2024.

• Dividends with yields of over 6% at Hidroelectrica and Nuclearelectrica

Shares of oil and gas producer OMV Petrom depreciated by 1.47% last month, while shares of Romgaz, Petrom's partner in the Neptun Deep project, had a slight advance of 1.69%. The two companies have started drilling the first natural gas exploitation well in the Black Sea, with production estimated for 2027. OMV Petrom proposed to shareholders, since February, a dividend yielding 5.4%, with the possibility of an additional allocation, while the management of the natural gas producer proposed a dividend yielding 2.3%. Both companies expect lower profitability this year, compared to 2024.

Shares of energy producer and supplier Hidroelectrica appreciated by 3.88% last month. The company has proposed that almost all of its 2024 profit be distributed as dividends, yielding about 6.6%. Hidro has budgeted for this year increasing revenues but a profit 12% below last year's, due to several factors, such as the pole tax and lower energy production. Nuclearelectrica, a company whose shares depreciated by 5.37% last month, has proposed to shareholders a dividend yield of 6.1% and has budgeted a profit slightly below last year's.

• Utility stocks fall

Transelectrica shares fell 6.95% in a month when Moody's revised the company's credit outlook from "stable" to "negative" and the issuer budgeted a profit about 75% below last year's. The electricity transporter's management proposed allocating 50% of its distributable profit as dividends, equivalent to a 2.1% yield, but the state demanded an allocation of 90%. Shares of energy supplier and distributor Electrica fell 13.36% last month, continuing the steep downward trend that the stock had been on after the publication of the results for the last quarter of last year.

Among the decliners, TeraPlast shares also stood out, which depreciated by 9%, One United Properties, which recorded a decline of 9.1% and Antibiotice shares, which fell by 9.47%. Shares of the logistics and freight transport company on the Danube Transport Trade Services depreciated by 19.3%, the largest decline in the BET index. The movement represents a continuation of the downward trend that began last year, as the exceptional profitability of 2023 and 2022, determined by the situation in Ukraine, disappeared.

• Trading discounts between 72% for Lion Capital and 47% for Longshield Investment

The BET-FI index, of former SIFs plus Fondul Proprietatea, fell by 2.1% to 60,649 points, with the evolution of the components of the basket of shares being mixed.

FP shares appreciated by 3.22%, in the context in which the fund is running a buyback program that supports the share price and proposed the distribution of dividends with a yield of 11%, the highest on the BVB.

Among the former SIFs, Evergent and Transilvania Investments propose the allocation of dividends, while the group controlled by Lion Capital, which includes Longshield Investment and Infinity Capital Investments, does not propose the distribution of money to shareholders. In April, Lion received a request for the allocation of dividends from a shareholder, a move similar to that of previous years, which was, however, rejected each time in the AGM.

At the end of March, former SIFs were trading at discounts between price and Net Asset Value (NAV) ranging from 72% for Lion Capital to 47% for Longshield Investment. For FP, the discount was 45%, above the manager Franklin Templeton's target of under 15%.

• ETF tracking Slovenia's main stock market index available on BVB

The Ministry of Finance raised over 2.2 billion lei through the Fidelis offering in March, with government bonds issued with maturities between one and seven years, with annual interest rates ranging from 3.75% to 7.80%, depending on the currency and duration of the bonds.

Croatian investment manager InterCapital Asset Management has listed an ETF on BVB that tracks Slovenia's main stock market index, which reflects the performance of the nine most traded companies on the Ljubljana Stock Exchange, adjusted by reinvesting their gross dividends.

Stanleybet Capital, a holding company that integrates and coordinates a network of sports betting agencies and slot machines, gambling halls and online gambling platforms, has listed its second corporate bond issue on the BVB Multilateral Trading System, for a total value of 14.8 million lei.

• Banca Transilvania, OMV Petrom and Hidroelectrica shares - in the top three positions in the turnover top

The total value of transactions with securities listed on the Main Segment of the BVB was 3.64 billion lei last month, 33% below that of February.

The average daily value of transfers also decreased by 36%, to 173.3 million lei, for the same reporting period. With transactions worth 324.8 million lei, Banca Transilvania shares occupy the first position in the share turnover top of March, while OMV Petrom shares occupy the second position on the podium, which accumulated transfers of 125.3 million lei. The top is completed by exchanges with Hidroelectrica shares, which amounted to about 93.5 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 about 368 billion lei, similar to that recorded at the end of February, according to the BVB monthly report.

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