THE 5% LIMIT, CLOSE TO BEING CERTAIN Euphoria surrounds the shares of the SIFs

• The funds may look at the SIFs differently if the law raising the holding limit goes through

Investors were pleased with the news that the Budget and Finances Commission of the Chamber of Deputies voted in favor of raising the holding limit in the SIFs, on Monday night, and pushed the price of the SIFs to rise about 10% in the first part of yesterday"s trading session.

At the end of the day, the BET-FI index (ed. note: of the five financial companies and of the Proprietatea Fund) was quoted at 18.381.35 points, up 4.05% over the previous day, with the SIFs posting gains going from 3.65% and 7.59%.

Even though the deputies seemed to have forgotten about the proposal of senator Ovidiu Marian concerning the increase of the limit in the SIFs, on Monday evening they surprised the market, which had been expecting this vote for a year and a half.

Capital market experts praise the decision of the Commission of the Chamber of Deputies and await the vote of the two chambers and the passing of the law, which, they say, will cause a lot more investors, including foreigners and investment funds to become interested in the SIFs.

• Valentin Ionescu: The vote of the Commission of the Chamber of Deputies is a good thing for the market

Valentin Ionescu, the managing director of the Bucharest Stock Exchange said: "The issue of the holding limit at the SIFs has been debated for years. Every time it was brought up, the stocks of the SIFs experienced gains. When the limit was raised from 0.1% to 1%, the impact on the market was positive.

Given this fact, I think that the license of the Budget and Finances Commission to raise the limit to 5% is a good thing for the market".

• Radu Hanga, BT Asset Management: A long-awaited event

The raise of the holding limit in the SIFs is an event which has been awaited for a long time, and a factor of normalcy for the capital market says Radu Hanga, the general manager "BT Asset Management". According to him, if this project to raise the holding limit materializes, it will represent an essential step towards the development of the market, representing a proof of respect for the rights of shareholders and of applying the corporate governance principles: "This translates into an increased interest of investors towards the capital market in Romania and a potential way of putting Romania on the map for those who until now used to avoid having exposure to Romanian companies".

He considers that the SIFs should not have any holding limit for shareholders, who should be the only ones to decide on the limits which can be imposed. "Even in the case of banks, which are far more exposed to shareholder concentration, all it takes is obtaining a license from the NBR", the head of "BT Asset Management" said.

In his opinion, the raising of the limit is also important for the future privatizations of the capital market, evidencing the interest in this market.

• Mihai Chişu, IFB Finwest: The SIFs are entering a new era

Mihai Chişu, broker at IFB Finwest, sees the holding limit as a pointless constraint and thinks that once the law is passed, the SIFs will enter a new era.

He said: "The approval of the Budget and Finance Commission for the raising of the limit in the SIFs is part of the conclusion to the long saga of the elimination of useless constraints from the financial investment companies. The vote in the plenum of the Chamber of Deputies and the passing of the law by the Chairman are the last two stages that need to be completed before it can be said that the Financial Investment Companies are stepping into a new era of their existence on the Romanian financial market".

He also considers that the raising of the limit will allow a greater involvement of the major financial institutions in the SIFs, a better application of the corporate governance principles, and, in time, a deeper involvement of the shareholders in the activity of these companies by exercising the rights which belong to them.

According to Mihai Chişu, yesterday"s rises of more than 10% once again prove that Romanian investors appreciate this action of the Budget and Finances Commission and most likely expect the Chamber of Deputies will vote in favor of the plan to raise the limit.

• Nicu Grigoraş, Intercapital Invest: The news concerning the holding limit will help the stocks of the SIFs decouple from the international context of the financial markets

Nicu Grigoraş, broker at "Intercapital Invest" says that the approval of the deputies won"t mean anything unless a clearly defined deadline will be announced in the immediate future and put up for vote. "News on this subject will cause the volatility of the shares of the five SIFs and most likely, in the short term, will decouple them from the evolution of the financial markets", said.

The broker considers that other serious reasons for investors to be interested in the shares of the SIFs are the low prices which they are trading at and the sale of their stakes in BCR which the SIFs will complete soon and which could generate significant dividends.

• Simion Tihon, "Prime Transaction": The complaints of the funds, resolved

Simion Tihon, broker at "Prime Transaction", considers that the large swings seen yesterday in the shares of the SIFs (between +5% and +10%) during the session still denote skepticism among investors.

"If the law were to get passed, that would resolve part of the wishes of the funds which have expressed interest in acquiring large stakes in these companies", said Mr. Tihon, who added: "The interest shown at this moment would probably lower the discount that the shares of the SIFs are currently trading at. Another effect would probably be the increase of transparency in the activity of the Financial Investment Companies, as their General Shareholder Meetings would see a greater quorum".

The change of the holding limit in the SIFs was proposed in June 2009, by PDL senator Ovidiu Marian, who wanted the elimination of the holding limit, but the Senate proposed a holding limit of 5%.

The draft bill got stuck in the Budget and Finance Commission of the Chamber of Deputies, after being approved by the Legal Commission in February 2010.