Slight increases for BVB indices, in an uncertain political and economic climate

The Bucharest Stock Exchange (BVB) indices registered slight increases in February, in a climate marked by geopolitical tension in Europe and political uncertainty in our country, where presidential elections are due to take place in May, elements that overshadowed companies' reports for the fourth quarter of last year and, in some cases, dividend proposals.

The BET index, of the twenty most liquid stocks on the BVB, advanced 3.1%, to 17,521 points, while the BET-BK index, the benchmark for the performance of equity investment funds, appreciated by 3.4%, to 3,301 points.

• US indices fall as Trump's policies raise concerns about economic growth

In the United States, major indices fell last month after President Donald Trump began imposing automatic tariffs on major US trading partners, including Canada, Mexico and China, raising concerns that trade tensions will stoke inflationary pressures and hamper economic growth, even raising the specter of a US recession. The Trump administration, which is trying to negotiate a peace deal in Ukraine and appears to have grown closer to Russian President Vladimir Putin, is gradually distancing itself from Europe and even NATO, prompting European leaders to announce an euro800 billion arms plan, on top of their current military spending.

In these circumstances, the S&P 500 index fell 1.4% last month, while the Dow Jones fell 1.6%. The Nasdaq Composite, a gauge of companies in knowledge-intensive sectors, fell 4%. In contrast, in Europe, where the arms program is creating growth prospects for many industries, indices rose last month, with the Stoxx 600 up 3.3%, while the DAX index on the Frankfurt stock exchange rose 3.8%.

• Alin Brendea, Prime Transaction: "In terms of companies' revenues and profitability, we observe rather a stagnation at an annual level"

At the Bucharest Stock Exchange, where companies presented their results for the last quarter of last year, the BET-XT index, which captures the dynamics of the 30 most liquid securities of our market, appreciated by 2.4%, up to 1,502 points.

Alin Brendea, stock market analyst at the brokerage company Prime Transaction wrote, in one of his weekly analyses: "The companies' financial information generally came, at first glance, in line with market expectations, so their impact was not special. Aggregately, in terms of revenues and profitability, we observe rather a stagnation at an annual level, in line with the general evolution of the economy in recent quarters. Under these conditions, the local market seems to consolidate its slightly upward lateral evolution this year."

• Transgaz, Romgaz and OMV Pentrom shares up; Hidroelectrica shares down

Transgaz Mediaş shares rose 18.7% last month, as the company's business is cyclical, with the last and first quarters of each year historically being the best. In addition, there was a prospect that the increase in transmission tariffs would be reflected in quarterly results. The gas transporter reported a 55% increase in net profit in the last quarter of last year, to 247.2 million lei, as total transmission revenues rose to 800.2 million lei, 16.7% more than in the last four months of the previous year, and the result from provisions was substantially improved.

Romgaz shares probably benefited from the increase in natural gas prices in the first month and a half of this year, with the company's shares gaining 9.1% in February. The gas producer reported a net profit of 945.8 million lei in the last quarter of last year, up 47% compared to the same period of the previous year. Turnover increased by 4.9%, to 2.3 billion lei, on the back of the higher quantity of natural gas delivered, the company also benefiting massively from the disappearance of the solidarity contribution. Shares of OMV Petrom, Romgaz's partner in the Neptun Deep project, appreciated by 2.9%, in a month in which the price of oil was falling. The dividend proposal with a yield of about 6% is an element that may have supported the quotation, given that the company reported a massive drop in profitability for the last quarter of last year, due to the lower prices at which it sold the fuel.

Shares of power producer and supplier Hidroelectrica fell 3.1% in a month when the company reported a 50.1% decline in profit for the last quarter of last year and a 22.7% drop in revenue, amid lower production and lower selling prices. On the other hand, expectations are that the issuer will pay at least 90% of its profit for 2024 as dividends, which supports the share price.

Transelectrica shares rose 10.7% last month in anticipation of the exceptional results reported by the electricity transporter for the period September-December 2024. The company made a profit of 186.7 million lei, compared to only 7.1 million lei in the last quarter of the previous year, amid an increase in all categories of revenue. Electrica shares appreciated by 5.7%, probably in the conditions of increasing distribution tariffs. On the other hand, the company reported a 53% drop in profitability for the last quarter of last year, amid rising expenses.

• Mixed developments for bank stocks in the BET index

Banks had mixed developments last month, with Banca Transilvania shares up 4.2%, while BRD-Groupe Societe Generale shares fell 1.7%, in a period of appreciation of European credit institutions. The Cluj-based credit institution reported a net profit of 824.4 million lei for the last quarter of last year, 19% above that of the same period in 2023, along with an increase in revenues, including the inclusion of OTP Bank in the reported results. In contrast, BRD's profitability stagnated, with the bank recording expenses related to the net cost of risks.

Shares of consumer goods distributor Aquila rose 15.6% last month, amid higher-than-usual transaction volumes for this issuer, which indicates acquisitions by high-caliber institutional investors, possibly pension funds. The company reported a profit of 33.6 million lei for the fourth quarter of last year, up 25.7%, while revenues increased by 12%. Digi Communications shares appreciated by 5.3%, while TeraPlast shares advanced by 1.9%.

• One United Properties and Premier Energy - among the stocks with depreciations, from the main BVB index

One United Properties shares continued their downward trend that began in the spring of last year, with the real estate developer's shares marking a decline of 4.5% last month. The company reported a net result of 82.8 million lei for the fourth quarter of last year, 21% below that of the same period of the previous year, as net income from the sale of residential properties and gains from real estate investments decreased. Transport Trade Services and Premier Energy shares also had decreases, of 2.5% and 2.1%, respectively, with both companies recording losses for the fourth quarter of last year.

• Trading discounts ranging from 70% for Infinity Capital Investments to 46% for Longshield Investment

The shares of all five former SIFs depreciated last month, causing the BET-FI index to fall by 1.66% to 61,948 points. The decline comes as the former SIFs have completely fallen off the radar of pension funds and other serious institutional investors, have no active retail investors and three of them do not pay dividends. Shares of Fondul Proprietatea appreciated by 8.3%, in the context in which the issuer is running a share buyback program and wants to grant a dividend with a yield of about 11%.

At the end of February, SIFs were trading at discounts between price and Net Asset Value (NAV) ranging from 70% for Infinity Capital Investments to 46% for Longshield Investment. For FP, the discount was 46%, above the administrator Franklin Templeton's target of under 15%.

• Green Tech International debuts on BVB

Green Tech International, a group that operates geothermal wells and a platform for geothermal energy solutions, debuted on BVB last month, after an IPO held in December last year. On the AeRO Market, Mikro Kapital, a financial institution dedicated to supporting microenterprises and SMEs, listed a two million euro bond issue. The Ministry of Finance attracted almost 4.3 billion lei through the Fidelis government bond issue held in February, the largest amount in the history of this program.

• 370 billion lei - the market value of all companies listed on the Main Segment of the BVB, including Erste

The total value of transactions with securities listed on the Main Segment of the BVB was 5,443.7 million lei, 519% more than in January, amid the listing of the Fidelis government bond issue.

The average daily value of transfers also increased by 457%, to 272.2 million lei, for the same reporting period, an appreciation also influenced by Fidelis, as shown in the BVB Monthly Bulletin.

With transactions worth 236.4 million lei, Banca Transilvania securities occupy the first position in the February turnover top, with OMV Petrom shares in second place, which accumulated transfers of 157.2 million lei. The top is completed by the exchanges of Hidroelectrica shares, which amounted to about 71.2 million lei.

At the end of last month, the market value of all companies listed on the Main Segment of our capital market (including Erste Group Bank) was about 369.3 billion lei, up 4% compared to that recorded at the end of January, according to the BVB monthly report.