New records at BVB; What's next?

Fiscal uncertainty did not scare investors at the Bucharest Stock Exchange (BVB), whose stock purchases on Friday took the BET index to a new all-time high of 13,801 points, above last January's 13,682 points, while the BET-TR index, which also reflects the dividends paid by the most important companies on our exchange, ended Friday's session at 27,820 points, also a new all-time high.

Brokers and analysts in our market are of the opinion that the dividends that investors will collect or those that are foreseen represent a factor that supported the growth of shares, along with the prospects of some companies or fields of activity. In addition, there is liquidity in the market, but certain fiscal measures circulated by the Government may cut the appetite of investors, experts say.

• Dragoş Mesaroş: "I think that those who have invested in FP will still focus on solid companies, with a certain history and paying dividends"

Dragoş Mesaroş, the trading director of the brokerage company Goldring, emphasizes that, in addition to the distribution of Fondul Proprietatea, allocations of money are also announced from other companies.

"Investors are going to receive dividends. The special ones from Fondul Proprietatea are by far the biggest and I think they keep the market up. And when the money actually enters the investors' accounts, it will definitely move the prices. Dividends are also foreseen at OMV Petrom, Banca Transilvania and Sphera. I expect that BRD will also come with a dividend proposal," the Goldring broker told us.

Fondul Proprietatea will distribute, on September 29, over nine billion lei from the money collected on the package held at Hidroelectrica. OMV Petrom has proposed granting a special dividend of 2.8 billion lei, which will be submitted to the shareholders' vote tomorrow, while Banca Transilvania wants to distribute 902 million lei. At Sphera, the dividend of 45 million lei is already approved, to be paid on September 19.

According to Goldring's director, investors who have held positions in FP and who have benefited over the years from rising share prices and cash distributions will still gravitate towards solid companies with some track record and dividend payers.

"Banca Transilvania, Hidroelectrica, OMV Petrom, Romgaz or BRD are among the companies to watch in the coming period," Dragoş Mesaroş told us. "In addition, there is a lot of money in the market. I'm not just referring to the capital market, where it was seen what large sums were raised for the Hidroelectrica offer. I mean the economy in general - compared to 2007-2008 when there was actually no money in the market, now the standard of living is different, salaries are different, the economy is more developed".

• Marcel Murgoci, Estinvest: "Investors will receive money, and if we look only from this point of view, the prospects look positive"

Marcel Murgoci, the director of operations of the Estinvest brokerage company, believes that until the dividend is paid by Fondul Proprietatea, the recent fiscal uncertainty will be clarified.

The broker told us: "Investors will receive money from dividends, and if we look only from this point of view, the prospects look positive. But certain information may emerge that dampens or perhaps even accelerates the appetite for stock purchases. The immediate impact comes from the package of fiscal measures (n.r. discussed by the Government). I think that by the time the dividend is paid by Fondul Proprietatea, things will be clarified. There are investors who sold before FP's ex-dividend date, and some with a higher risk appetite may already be buying shares from the market. Others are probably waiting for things to clear up before making an investment decision."

Since the beginning of August, several variants of tax changes considered by the governing coalition have been circulating in the press. Among the measures with a direct impact on investors' portfolios are the application of a tax on the exceptional profits of banks, the increase of taxes on dividends or on capital gains, but which are not final.

• Elena Uleia: "Nuclearelectrica and Hidroelectrica have good prospects, considering the increase in profitability despite higher taxes"

Elena Uleia, CFA, Portfolio Manager within Prime Transaction, believes that a large part of the money distributed by Fondul Proprietatea will return to the market, and the targeted investments will be dividend companies and those that have reported good results.

"The companies on the electricity market, Nuclearelectrica and Hidroelectrica, have good prospects, considering the increase in profitability despite higher taxes. On the other hand, we see the companies in the oil and gas area affected by the economic context and the measures coming from the political area regarding overtaxation, but in the long term the prospects for OMV Petrom and Romgaz are good, considering the gas exploitation project in the Black Sea ", the financial analyst told us.

Elena Uleia added: "The companies in the banking sector reported good results, being advantaged by the inflationary macroeconomic context in which the reference interest rate remains at the highest level since 2008. The fiscal uncertainty regarding the possible taxation of exceptional profits obtained by banks, it certainly puts pressure on investors' decisions, but it remains to be seen to what extent the final decision on the surcharge will affect the profitability of companies".

Externally, the Prime Transaction team is watching the macroeconomic context that translates into a global economic downturn, the CFA analyst added. Also the evolution of inflation, which is currently on a downward trend, but which comes after a year in which the inflation rate appreciated strongly, which means that a large part of the slowdown is a base effect.

"Internally, I believe that a positive influence on the market can come as a result of new listings, whether we are talking about state-owned companies, such as the National Salt Company, or Romanian entrepreneurial companies", Elena Uleia told us .

The Salrom listing was approved by the company's shareholders (Ministry of Economy and Fondul Proprietatea) and by the Government (by memorandum), but at this moment there are no clear signals regarding the timing of the listing.