The growth of the BET index outperformed the performance of the European markets

New historical highs for the main indices of the Bucharest Stock Exchange (BVB), the largest listing in the history of our capital market, the increase in turnover and the number of investors, the freezing of listings of companies in the AeRO Market and a new postponement of the operationalization of the Central Counterparties represent the main elements that defined the evolution of our stock market in 2023.

The BET index, which captures the dynamics of the twenty most liquid securities of the BSE, had an increase of 31.8% last year, while with all the dividends, the appreciation of the basket of shares, reflected by the evolution of the BET-TR index, raised to 39.9%.

It is an appreciation that manifested itself, almost entirely, in the second part of the year, with the listing of Hidroelectrica. The energy producer carried out the largest public offering in BVB history, which brought new money and investors into the market. Fondul Proprietatea, the seller in the offer, distributed all the money collected from the sale of the 20% stake in Hidro to the shareholders, the largest distribution in the history of our stock exchange. In addition, Hidroelectrica's listing significantly increases the chances of our market entering the MSCI emerging markets category.

For the whole year, the growth of the BET index was above the European average, reflected by the Stoxx 600 index, whose advance was 12.7% in 2023. In the United States, where the Federal Reserve ended the monetary tightening cycle, the S&P 500 index rose 24.2%, while excitement over artificial intelligence sent the Nasdaq Composite up 43.4%.

In our region, the WIG 20 index, of the Warsaw stock exchange, had an advance of 30.7%, last year the PX index of the Prague market appreciated by 17.3%, and the BUX index from Budapest, which is a basket of Total-Return stocks, rose 38.4% in 2023. This year, after a rise in the first part of January, the BET index has depreciated so that it is currently near the level from which it started in 2024.

• Transport Trade Services, Sphera and BVB - the stocks with the highest returns in the BET last year

At the Bucharest Stock Exchange, eighteen of the twenty stocks that make up the BET index had positive total nominal returns last year, with most of the gains coming from price increases, with the exception of Fondul Proprietatea.

The biggest increase in the stock market quote, of 135%, respectively a return of 140% including dividends, were held by the Transport Trade Services titles, given that the situation in Ukraine favors the activity of the river carrier and the port operator. For the company, a year with a large increase in profitability is shaping up, after in the first nine months of last year the result was 84% above that of the same period of 2022.

The shares of the Bucharest Stock Exchange had an increase in the quotation by 86%, respectively a total yield of 89%, against the background of the listing of Hidroelectrica and the accumulations made by the institutions in order to have more votes at the meeting in which the members of the Council of Administration.

The shares of Sphera Franchise Group, the operator of the KFC, Pizza Hut and Taco Bell brands, rose by 84%, respectively a total return of 95%, in the context of a strong increase in profitability. Shares of Purcari Wineries appreciated by 69%, and with dividends the yield rose to 75%, probably also on the background of diminishing fears regarding the risk of a Russian invasion.

• Bank share valuations above the European average

In a period when the Euro Stoxx Banks index rose by around 23%, the main credit institutions from BVB, respectively Banca Transilvania and BRD-Groupe Societe Generale, had increases of 37% and 38%, and the bank's total yield from Cluj rose to 44%.

The increase in net interest income and a certain robustness of the economy, which meant that debtors did not have payment problems, which was seen in the profitability of credit institutions, the listing of Hidroelectrica which brought new money to the BVB and the prospect of our market moving into the category to emerging MSCI are elements that can explain the evolution of banking shares last year.

• All major stocks in BET-NG ended the year in positive territory

The BET-NG index of energy and utilities companies advanced 31.4% last year, with all its major stocks ending the year in positive territory. Hidroelectrica reported increasing revenues, production and profitability in the first nine months of last year, and the share price ended the year with 16.4% above that of the first day of trading. In contrast, other energy companies had declining financial results, but dividends, monopoly or oligopoly positions, the various projects in which they are engaged and the general context favorable to risky assets supported the growth of quotations and yields.

Contrary to the dynamics of the oil price, OMV Petrom shares increased by 37% last year, and including dividends, the total yield rose to 56.4%. For Romgaz and Nuclearelectrica securities, the increases were 32.7% and 14.7%, the total returns being 41.8% and 24.7%, respectively. In the utilities area, Electrica shares had a price increase of 41.9%, with a total return of 43.4%, while Transelectrica shares appreciated by 38.7%, respectively a total return of 42%.

• Adrian Tănase, BVB: "We see the CCP functional in 2024"

The year 2023 did not bring the authorization and operationalization of the Central Counterparty, as Adrian Tănase, the general director of BVB, estimated a year ago.

The CCP project, an entity intended to facilitate the relaunch of the derivatives market in our country and short sales, was approved by the stock exchange shareholders in November 2019. According to the original plan, 2020 should have been the first year of operation of the Central Counterparty, and in the following year the company should have made a profit. There were still delays, so that the BVB's business strategy for the period 2021 - 2024 mentions the year 2022 as the objective for the launch of the derivatives market. Therefore, the operationalization of the CCP has just entered its fourth year of delay.

"An important element for the Bucharest Stock Exchange and for the development of liquidity and the capital market is the functionality of the Central Counterparties project. In 2023 we made significant progress in the authorization process and we see this project operational in 2024", said Adrian Tănase, the general director of BVB, according to the latest press release of our capital market operator.

It's a statement we've been hearing for years and maybe it will come true at some point. Until then, the CCP has expenses and zero income, the entity registers losses, and our market has no derivatives. Also last year, a new Council of the operator of our capital market was elected, for a period of four years, and Radu Hanga was re-elected as president of BVB.

• Patria Bank has listed an ETF that offers exposure to the energy sector; Agricover Holding's offer failed

Millenium Insurance Broker is the only issuer that listed last year on the AeRO Market, after ten listings of shares in 2022 and twenty in 2021. The drought appears in a context marked by high interest rates, uncertainty regarding the progress of the economy and distrust in the market after a series of small listed companies in previous years have completely disappointed investors' expectations.

In the Regulated Market, Patria Bank launched a new ETF, dedicated to the energy sector - ETF Energy Patria Tradeville. On the other hand, Agricover Holding's offer failed, due to a number of factors including the launch just before Hidroelectrica's offer or the price considered high compared to other issuers on our stock exchange.

The Ministry of Finance made four issues of Fidelis government bonds, denominated in lei and euro, the total amount collected from the population being 9.4 billion lei.

At the end of last year, there were around 180,000 investment accounts at the BSE (but fewer investors, because one person can have several accounts), 34% more than the number of accounts at the end of 2022, according to data from the Investor Compensation Fund . But the value of the accounts is small, given that approximately 123,400 accounts were within the compensation ceiling of 20,000 euros, and the average portfolio of a fully compensable investor was 4,200 euros.

There were maybe 40,000 active investors, given that, in the middle of last year, there were around 44,000 active accounts, according to ASF data.

The average level of daily transactions with shares listed on the Regulated Market amounted to 97.4 million lei, last year, the highest in BVB history, but the value was strongly pushed up by Hidroelectrica's offer, so that the real measure of trading is smaller.