English
• The BET-FI index rises 10.06%
• Farmache: "The holding limit is not the only factor that influences liquidity"
A burning wish of investors - the raising of the maximum holding limit in the SIFs - was fulfilled yesterday, after a wait of approximately two years.
Yesterday morning, the deputies discussed the project to raise the holding limit in the SIFs from 1% to 5%, which caused the Bucharest Stock Exchange to suspend trading in the shares of the SIFs in the beginning of the session. A little before 11 o'clock, the Chamber of Deputies began the vote, and the draft bill was passed with 170 votes in favor and 63 against.
The shares of the five financial investment companies resumed trading (ed. note: at 11:35), and their prices quickly rose by up to 15%, and the BSE raised the upper fluctuation limit to 25%. By the end of the session, the rises began to wane; the BET-FI index which tracks the evolution of the SIFs and of the Proprietatea Fund ended the day at 19,943 points, up 10.06% over Wednesday's price.
Several investors claimed that the raising of the holding limit in the SIFs represents one of the solutions for the development of the stock market.
• Dan Paul: The Board of the Exchange did not support the project to raise the holding limit in the SIFs
Dan Paul, the president of the "Association of Brokers", considers that an important benefit of this draft bill is the increase of liquidity in the market. "By raising the holding limit, the market will grow, and institutional investors will be able to buy bigger blocks of shares".
On the other hand, Stere Farmache, the president of the Bucharest Stock Exchange said that the raising of the holding limit in the SIFs will not have a major impact on liquidity in the market. "The holding limit is not the only factor that influences liquidity", he emphasized.
The president of the Bucharest Stock Exchange went on to say: "It is important that the raising of the holding limit in the SIFs does not result in an excessive concentration of shares to the detriment of freely tradable shares, given the fact that the 5% blocks don't have a good mobility".
Dan Paul, the president of the "Association of Brokers" disagrees. According to him, the "Board of the Exchange did not support the project to raise the holding limit in the SIFs, even though it could and should have".
• Mihai Fercală, SIF3: Liquidity may increase, but the Stock Exchange should rely less on the SIFs
Mihai Fercală, the chairman of SIF3-Transilvania, considers that on principle, liquidity may increase, and that the number of trades will increase by 45%
Still, Mihai Fercală considers that raising the holding limit in the SIFs is not the solution to help the market develop. "Saving the market can only be done by stabilizing the economy and strengthening companies, not through legislative gimmicks", he said, and he added that the Bucharest Stock Exchange should reduce its reliance on the SIFs.
Lately, market liquidity was low, as brokers placed this problem on the uncertainty of investors about the evolution of the market near the end of the year.
Mihai Fercală said that, although he agrees with the raising of the holding limit, the initiative should have come from shareholders, not from the members of the Parliament. "The decision to raise the holding limit of the SIFs should have been taken in the General Shareholder Meeting, just like it happened when the holding limit of 1% was set", he said.
Mihai Fercală said that the problem of raising the holding limit was debated by the shareholders in the General Shareholder Meeting, but the proposal was not approved by the Romanian National Securities Commission (CNVM), which claimed that it violated the provisions of the legislation in effect.
• The management of SIF2: The project will help the development of the SIFs
The Board of Directors of SIF2 "Moldova" estimates that the approval of the project concerning the raising of the holding limit to 5% will be beneficial to the development of the capital market, as well as of the financial investment companies, according to a press release sent yesterday to the Bucharest Stock Exchange.
The management of SIF2 considers that the possibility of increased involvement from institutional investors in the shareholder structure of SIF2 creates favorable premises for the implementation of investment policies, the amendment of the articles of incorporation, and the development of the company in agreement with corporate governance principles, the aforementioned press release says.
• Ovidiu Marian: The Parliament has proven that it is interested in corporate development and in the rights of investors
Ovidiu Marian, the initiator of the project, said that the Parliament has proven that it is interested in corporate development and in the rights of investors. He mentioned that before the project was passed, Romania was the only country in Europe where investment funds were only allowed to buy up to 1% of the shares of investment companies.
Ovidiu Marian said that, depending on the evolution of the market, he would initiate a second project by which he would propose the elimination of the holding limit in the SIFs for the second time.
In 2009, PDL senator Ovidiu Marian proposed the elimination of the holding limit in the SIFs, but instead, the Senate only allowed its raising to 5%.
After two years, during which time the deputies seemed to have forgotten about the initiative of senator Ovidiu Marian, on November 7th, the project received the approval of the Budget and Finance Commission in the House of Deputies.
At that time, investors were happy with the approval of the plan to raise the holding limit in the SIFs, and the stocks of the five SIFs jumped approximately 10%.
The project was included on the agenda of the Chamber each week starting with November 21st, and the prices of the SIFs fluctuated based on the statements made by various parties involved.
• Victor Cionga, AZ Capital Advisors: A step forward
The raising of the holding limit in the SIFs represents a step
forward, which would have, however, had a far more positive effect on the local stock market and the Romanian economy if it had been taken ten years ago, considers Victor Cionga, managing partner at "AZ Capital Advisors".
He said: "This needs to be followed by other reforms which depend on the Romanian National Securities Commission and the BSE, reforms intended to make the Romanian stock market more competitive in the acerbic competition to attract institutional investors. What I am referring to includes the reduction of the trading costs, the introduction of a "genuine global account", the simplification of the paperwork needed for opening an account, OTC trades etc. Many of the reforms depend indirectly on local brokers".
• Lucian Anghel, BCR: The stock market has a far greater potential than the banking system
Lucian Anghel, chief-economist of BCR, said that the decision of deputies eliminates one of the barriers that international and Romanian investors alike were faced with when trying to make portfolio investments on the Bucharest Stock Exchange. "I expect the measure to lead to an immediate increase in trading volumes", Lucian Anghel said. According to him, the Bucharest Stock Exchange has a potential for growth in the long term which far exceeds that of the banking system, if all the players on that market succeed in joining their forces to pursue a medium and long term vision. "There is a small window of opportunity for the Bucharest Stock Exchange in 2012 which we do not have the right to miss, if we want to develop in Romania as well other financing instruments than bank loans", the economist of BCR said.
• Mihai Chişu: A historic decision
"Today (ed. note:) a historic decision was made concerning the five financial investments, and a major injustice which the shareholders of these companies were subjected to over these last 12 years has been set right", said Mihai Chişu, broker at IFB Finwest. He considers that, by the raising of the holding limit, these companies are entering an era in which shareholders will be able to actively get involves in their development. "The tendency to reform is one that will take shape in the medium term and will most certainly result in major changes in the leadership and the quality of the management of those companies", he said, and he went on to say: "We can say that starting today (ed. note: yesterday) the SIFs are finally starting off on the road towards eliminating abuse, petty interests and non-performing management, and towards creating room for quality, transparency and the implementation of the principles of corporate governance".
• Dumitru Beze, The Association for the Protection of Capital Market Investors
"Finally, the premises for the development of the Romanian stock market are created", considers Dumitru Beze, the chairman of the Association for the Protection of Capital Market Investors.
"We are hoping that the Romanian stock market will earn its role of forming Romanian capital, of financing Romanian entrepreneurs and to change from a nation of people paying interest into an independent, economically developed people, which possesses the true value of the real middle class", he said.
• Florin Ilie, ING: Investors may overestimate the impact of the news
The piece of news was heavily discussed over the past month, meaning that it was partially already included in the price of the shares, says Florin Ilie, director of the equity markets at ING Bank Romania, in a report. "Still, we may still see price increases in the short term, which would overestimate the practical impact of the raising of the holding limit", he considers.
• Gabriel Aldea, Intercapital Invest: High interest due to dividends
"The decision to raise the holding limit can be considered without making a mistake as being a one that is historical for the Romanian stock market, when one considers the fact that investors have been waiting for it for years", said Gabriel Aldea, Head of the Front Office Department at SSIF Intercapital Invest SA. According to him, this is an important step towards the maturation of our capital market and towards its normalcy, but the main winners are investors, as they will be able to exercise their rights when it comes to the SIFs.
"The increase of the holding limit in the SIFs will probably result in medium term price increases, as the stake of raising the holding limit will cause important investors to take buying positions in the coming period", he said, and he went on to say: "Moreover, when one takes into account the fact that this year the SIFs will see substantial profits from the sale of their stakes in BCR, it is to be expected that there will be higher interest than normal, in terms of the dividends which they may pay out next year.
Still, in the short term, I am considering the possibility of major volatility in the SIFs, the quick increase of quotations, causing many speculators to book their profits, giving the fact that conditions seen in the foreign markets are rather negative". (ADINA ARDELEANU)
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