Index gains ahead of Q2 reports

The indices of the Main Market of the Bucharest Stock Exchange (BVB) had slight increases in July, before the sharp fall at the beginning of this month, caused by factors external to our country.

The BET index, of the twenty most liquid securities on the BSE, had an advance of 2.1%, to 18,630 points, while the BET-BK index, the yield benchmark of investment funds, appreciated by 2, 3% to 3,468 points, with both baskets of shares hitting new all-time highs over the past month.

• Traders estimate a more than 50% chance the Fed will cut interest rates by 50 basis points in September

In the United States, the main indices began to have steep declines since the second half of July, the market observed a rotation of investors' preferences towards Small Cap and partially Value type companies, perceived as cheaper, in the disadvantage of the big names in technology. The S&P 500 rose 1.1% last month, while the Nasdaq Composite declined 0.7%. In contrast, the Russell 2000, of small-cap companies, rose 10.1%, before the severe decline in early August.

The Federal Reserve left interest rates unchanged, and some analysts and investors are wondering if the US central bank has kept interest rates high for too long, putting the US economy at risk of a recession. In addition, labor market data showing a sharper-than-expected decline, along with the Bank of Japan's interest rate hike, put a sharp dent in stock prices late last month and early this month.

Futures traders are currently betting on a Fed rate cut next month, with a 55% chance the bank will cut as much as 50 basis points, according to the CME FedWatch Tool. In Europe, where the European Central Bank left interest rates unchanged, the Stoxx 600 index rose by 1.32%, in July, the DAX index rose by 1.5% in Frankfurt, and the FTSE 100 index rose by 2.5% in London %. In tune with the American markets, at the beginning of August, the European stock markets had significant declines.

• Aquila, Transelectrica and Sphera - the best developments in BET

At the Bucharest Stock Exchange, the BET-XT index, which groups the thirty most liquid shares of our market, had an increase of 2.01%, in July, up to 1,587 points, ahead of the second quarter financial reporting season, respectively the first semester.

With an appreciation of 8.64%, Aquila shares had the biggest increase in the BET, with the quote marking new all-time highs. There are no obvious specific reasons to explain the increase in the price of the shares of the distribution and logistics company for the consumer goods market, but the large volumes suggest purchases by high-quality institutional investors, such as Pilon II funds. BT Capital Partners estimates that Aquila will report, in the second quarter, a profit increasing by almost 70% compared to the same period last year, according to a report published on the BVB Reseach Hub portal.

Transelectrica's shares appreciated by 8.3% last month, the share price briefly approaching the historical record of 2007. According to analysts, the company's prospects are favorable, considering the increasing regulated tariffs and lower costs of own technological consumption.

Shares of Sphera Franchise Group rose 6.35% last month, continuing an uptrend that began early last year. According to analysts, the company can benefit from the current economic growth, which implies an increase in consumption. As such, Sphera is on the radar of the Pilon II pension funds, which from March benefit from increased contributions from future retirees.

• Dividends of almost 1.9 billion lei from OMV Petrom

OMV Petrom shares rose 3.14% last month as the company reported a 2.8-fold increase in first-half profit compared to the first six months of 2023 and shareholders approved the allocation of special dividends of almost 1.9 billion lei. The shares of Romgaz, OMV Petrom's partner in the Neptun Deep project, fell by 0.5%, a dynamic that also implies an ex-dividend date.

Nuclearelectrica's shares appreciated by 2.74%, in a month in which shareholders approved the project based on the technology of small modular reactors from Doicesti, while Hidroelectrica's shares stagnated. Electrica shares rose by 4.5% last month, in a continuation of the upward trend throughout this year, supported by positive financial results and better rates for the company related to distribution services.

In terms of declines, Digi Communications stocks are notable, which fell by 6% last month, while TeraPlast stocks depreciated by 3.55%. The building materials maker reported an increase in revenue, but larger losses, in the first six months of the year.

• Trading discounts between 73% for Infinity Capital Investments and 51% in the case of SIF Muntenia

The BET-FI index, of the former SIFs plus Fondul Proprietatea, had an advance of 4.08%, in July, up to 61,167 points, an increase mainly due to the evolution of FP shares.

The fund announced the submission to the ASF of a request for the approval of a public offer through which it wants to buy back at most 350 million FP shares. Historically, the fund's offers have been made at prices significantly above those of the market, which has now printed an increase in the quote.

At the end of the month, the former SIFs traded at discounts between the price and the Net Asset Unit Value (VUAN) between 73.5% for Infinity Capital Investments and 51% in the case of SIF Muntenia (the current Longshield Investment). For FP, the discount was 36.6%, above administrator Franklin Templeton's goal of below 15%.

Last month, the third primary offer for the sale of Fidelis government securities of this year ended, through which the Ministry of Finance attracted over 2.1 billion lei (435.5 million euros) from the public, the securities being traded at BVB.