Remus Dănilă, BVB: "Optimism related to the MSCI upgrade is not as high as it was three months ago"

The liquidity of our capital market is still below the criteria required by MSCI for promotion to the category of emerging markets, said Remus Dănilă, Head of IR & Business Development at the Bucharest Stock Exchange (BVB), on the occasion of a conference on Wednesday evening.

The BVB representative said: "Our level of optimism about the MSCI upgrade is not as high as it was three months ago. We see from our statistics that, from the point of view of liquidity, we are still slightly below the level desired by MSCI. There is also a problem of technicalities. There are four companies that fit in size (n.r. in the criteria of the rating agency), but the median of the daily volumes is not the desired one, and that has a little to do with the structure of the market. There are days with very, very good volumes but also days when the volumes are unsatisfactory and the median is not where we would like. So related to the MSCI upgrade the message is moderate. We are confident but it is not at all a certainty that we will have good news in June".

In order to be promoted from the echelon of frontier markets to that of MSCI emerging markets, the BVB must meet a series of criteria related to market accessibility, which according to the statements of the stock exchange managers are met, and a criterion related to size and liquidity - at least three companies with a capitalization of at least 2.066 billion dollars, which has a free-float of at least 1.033 billion dollars and an annualized liquidity of at least 15% (from the capitalization of the free-float).

According to an analysis carried out by Egle Fredriksson, Portfolio Manager at East Capital Asset Management, in July last year, Hidroelectrica, OMV Petrom, Banca Transilvania and Romgaz were the main companies that met the size criteria, but none of the three eligible companies then ( OMV Petrom, Banca Transilvania and Romgaz) did not meet the liquidity criterion.

Currently, our market is the category of frontier markets.

MSCI annually assesses markets for possible reclassifications, with the conclusions of each assessment, including markets monitored for possible reclassification in the next cycle, being announced in June.