Ovidiu-George Dumitrescu: The BSE may end the year 2012 with a positive trend

Reporter: What are your estimates on the evolution of the capital market for this year?

Ovidiu-George Dumitrescu: It is very likely that the beginning of the year will continue to be ruled by the current uncertainties, and the selling pressure will continue. In the second half of 2012 we expect that, in spite of a still unfavorable macroeconomic situation the markets will anticipate a recovery which will take place in the second quarter of 2013.

As such, it is possible that the end of 2012 will see the international markets and the BSE on a positive trend.

Reporter: Which sector do you think is still worth the attention of investors in 2012? Why?

Ovidiu-George Dumitrescu: Ignoring any particular situations, I think that, at least in the first part of 2012, what deserves the attention of investors is defensive stocks, in particular those in the pharma and utilities sectors, due to the inelastic demand for their products and services, which allows them to keep a reasonable dividend level, which would mitigate, at least partially, a less spectacular evolution of their stock prices. At that time, the dividend policy will depend on the choices made by the shareholders which have controlling interests.

Amid tensions in the Middle East, oil and gas companies, especially those focusing on production, can also provide opportunities for investors with an above average risk-appetite.

Furthermore, given the special nature of this recession, I think that investors will also focus on companies that offer support services to other companies (for instance, management software) or even towards luxury goods, given the social polarization that we are seeing, especially in Europe and the USA. The selection process will still play an important part in this case.

In an optimistic scenario, towards the end of 2012, we could see a recovery of the following sectors: energy, commodities (including metallurgy) and transportation. But this hypothesis almost fully depends on when the market estimates the period of weaker financial results expected in Europe -if not all over the world- will end.

Reporter: How do you see the evolution of the shares in 2011?

Ovidiu-George Dumitrescu: In order to simplify things I think we can call 2011 "the year of volatility".

Whereas the first three months of the year provided investors with hope, due to the important gains of the local indexes, what followed was a drop which was "hard to swallow" for many of the market participants. From this point of view, the summer was "glacial", with significant drops for most of the symbols in the market. Starting with the first week of August, the main indexes fell below their 2010-end values. Unfortunately, the most important local indexes have remained 15 - 20% lower, compared to the beginning of the year.

Reporter: What were the main factors which have influenced the evolution of stocks in 2011?

Ovidiu-George Dumitrescu: On a general level, the market was influenced by the concerns over a new recession in the developed world and by the sovereign debt crisis in the Eurozone. Furthermore, the political struggle in the United States was another important factor which contributed to the investors' loss of confidence, both on a global level and on the local market level. It's true, there have also been shares (such as OLT - Oltchim, AZO - Azomures or UARG -Argus) for which the specific factors were more important than the systemic ones, which is why they had such spectacular rises, most of the time in dissonance with the fundamental data of the issuers.

Reporter: What were the year's "star" stocks?

Ovidiu-George Dumitrescu: In the first part of the year, the shares of the Proprietatea Fund held the headlines. Later, we had the spectacular surges in companies such as "Oltchim", "Azomureş" or "Argus", amid some favorable contexts in terms of demand for stocks.

At the end of the year we had the transfers of "Electromagnetica" and "Artego" from the Rasdaq to the regulated market of the BSE.

Reporter: What were the good and the bad points of the year?

Ovidiu-George Dumitrescu: In our opinion, the greatest gain for the market was the listing of the stock of the Proprietatea Fund, both through the added liquidity to the market, as well as through the involvement on the domestic capital market of one of the most prestigious asset management company in the world ("Franklin Templeton").

Other positive elements were the transfers of "Electromagnetica" and "Artego" from the Rasdaq to the regulated market of the BSE, and, recently, the approval by the Romanian National Securities Commission of the regulatory framework needed for the issuing and operation of ETF instruments.