Increases for BVB indices, in a month marked by dividends granted by companies

The upward trend of the main indices of the Bucharest Stock Exchange (BVB), which started in the second half of last year, continued in June, during which our market was under the specter of dividends granted by its main companies.

The BET index, which captures the dynamics of the twenty most liquid stocks on the BSE, advanced 3.73% to 18,245 points, after the basket of shares hit a new all-time high during the month, while the index BET-TR, which also reflects the dividends paid by the issuers, had an advance of 6.38%, up to 39,748 points. The BET-BK index, the yield benchmark of investment funds in shares, appreciated by 4.28%, to 3,390 points.

• The Federal Reserve will not cut interest rates until it has "greater confidence" that US inflation is moving toward its 2% target, according to CNBC

In the United States, the technology sector continued to be at the fore of investors, primarily due to expectations related to the impact of artificial intelligence on productivity and innovation, a fact reflected in the dynamics of indices. The Nasdaq Composite of knowledge-intensive companies rose 5.9% last month, while the S&P 500 gained 3.5% and the Dow Jones only 1.1%.

The Federal Reserve left its policy rate unchanged as inflation, although falling, remains well above the US central bank's 2% target. According to minutes from the last meeting of Fed officials, inflation is moving in the right direction, but not fast enough for a rate cut, according to CNBC.

On our side of the Atlantic, the European Central Bank cut its benchmark interest rate for the first time since 2019, a sign that the anti-inflationary measure applied over the past almost five years seems to be paying off. But the main indices were slightly lower last month as the technology sector is much less represented than in the United States, and the results of the European Parliament elections, which highlighted the rise of far-right parties, likely influenced investor sentiment.

• Appreciation of 6.52% for BET-XT-TR, which also reflects the dividends granted by the extended index of our stock market

At the Bucharest Stock Exchange, the BET-XT index, which reflects the dynamics of the thirty most liquid securities of our market, rose by 4.25%, to 1,556 points, while the extended index of our market, with dividends, had an appreciation of 6.52%, dynamics reflected by the evolution of the BET-XT-TR index.

Dividends - respectively the registration dates and payments made by many companies in the first stock market league from Bucharest, were probably the central element that supported the June increase in the indices.

"This month, BET issuers will pay private investors (calculation from which we exclude the dividends received by the state) about three billion lei. A good part of this money has returned and will return to the market, and this cash flow is the main growth vector in the short term", wrote Alin Brendea, the director of operations of Prime Transaction, in a report published in the first part of last month.

Also, share prices are supported by the constant purchases of private pension funds Pillar II, for which contributions have increased this year from 3.75% of the monthly gross income of employees to 4.75%, so that administrators benefit from more lots of money to invest.

• Increases for bank stocks

The price of shares of BET companies had mixed developments last month, the declines being driven, in some cases, by ex-dividend corrections related to the allocation of money to investors.

In the banking sector, the shares of BRD-Groupe Societe Generale had an advance of 10% in June, while Banca Transilvania securities appreciated by 2.56%, the quotation of the credit institution from Cluj having an ex-dividend decrease on during the month. In addition, the EBRD sold a stake of 1.7% of the bank's capital at a price almost 9% below the benchmark, which created short-term volatility in the market.

Roxana Stejerean, financial analyst at Goldring, believes that we are in an environment favorable to the increase in loans granted to clients by banks. "The general economic context of Romania indicates a continuation of economic growth, supported by macroeconomic stability and inflation control, which will stimulate the demand for loans from both companies and individuals", the analyst wrote in a report published on the website of the brokerage firm.

• Prospects for higher dividends at OMV Petrom; ex-dividend correction at Hidroelectrica

OMV Petrom shares appreciated by 8.9%, in a month in which the price of Brent oil (relevant for the European market) increased by 4%, and the company proposed a special dividend to shareholders and updated the policy on possible future distributions.

The oil and gas producer wants to allocate a dividend with a gross yield of almost 4%, on top of the one already paid at the beginning of last month. It also estimated an allocation of around 50% of cash flows from operating activities each year until 2030, compared to 40% until recently.

Romgaz shares rose 9.76% last month in a recovery move after the ex-date decline caused by the capital increase through the granting of free shares and the approach of the record date for the distribution of dividends.

Hidroelectrica's shares, which this month complete a year since they were traded on the BSE, fell by 6.59%, due to the registration of the ex-dividend correction, while Nuclearelectrica's shares had a 1.08% setback in June. Both companies have revised down their Income and Expenditure Budgets for this year.

• High marks for utilities

Transelectrica's shares appreciated by 26.97% last month, in a context where the company's prospects are favorable, considering the increasing regulated tariffs and the lower costs of its own technological consumption, according to a Prime Transaction report. Also, Traselectrica signed a memorandum with three energy companies from Azerbaijan, Georgia and Hungary for the implementation of the "Green Energy Corridor" project.

Electrica's shares rose 12.59% in June in a continuation of the year-to-date uptrend, supported by positive financial results and better rates for the company related to distribution services. Transgaz shares appreciated by 5.57%, while Conpet's shares depreciated by 2.27% last month.

• MedLife and Sphera - among the BET performers

Shares of MedLife rose 16.86% in June, a continuation of the strong uptrend that the private healthcare provider's stock has developed since mid-May, when it announced a return to profit, growing business and margins. Also, Erste Group raised the price target for the MedLife share and changed the recommendation from "Hold" to "Accumulate", according to an analysis report published on the BVB Research Hub portal.

The shares of Sphera Franchise Group appreciated by 9.57%, last month, while Erste also recommended "Buy" for the titles of the operator of public food chains, with a target price above the market quotation, and for the first three months of the year, Sphera reported an almost triple profit compared to the January-March period of last year. Also in the area of growth in BET, Aquila titles also stood out, which rose by 5.19% last month, without obvious fundamental reasons.

• Trading discounts between 72% for Infinity Capital Investments and 53% in the case of SIF Muntenia

The BET-FI index, of the former SIFs plus Fondul Proprietatea, had a decline of 0.28%, in June, to 58,757 points, depreciation caused by the rebound of FP shares.

The Fund's securities, whose importance on the Bucharest Stock Exchange decreased significantly after the sale of the holding in Hidroelectrica, had a decrease of 14.69%, last month, as pension funds reduce their holdings in FP, as is evident from reports.

At the end of the month, the former SIFs traded at discounts between the price and the Net Asset Unit Value (VUAN) between 72% for Infinity Capital Investments and 53% in the case of SIF Muntenia (the current Longshield Investment). For FP, the discount was 38%, above administrator Franklin Templeton's goal of under 15%.

• JT Grup Oil attracted 20 million lei from investors, about a third of the launched offer

JT Grup Oil, a company active in the fuel distribution market, carried out an IPO through which it attracted 20 million lei from investors, about a third of the total offer, the company's shares will be traded on the AeRO Market.

Also last month, Glissando Garden Center, a company specialized in the trade of flowers, plants, gardening articles and plant protection products, debuted in the AeRO Market, following a technical listing.

The Ministry of Finance collected 2.16 billion lei from the public through the latest Fidelis bond offering, about 30% less than in the previous offering. The issue was divided into five tranches, including one dedicated to blood donors, with annual interest rates between 6% and 7% for the tranches in lei, respectively 4% and 5% for those in euros. The securities were listed on the Bucharest Stock Exchange on July 4.