THE MINISTRY OF FINANCE HAS CHANGED ITS MIND ABOUT ELIMINATING THE HOLDING CAP OF THE SIFS We don't think Ioana Petrescu capable of manipulating the SIFs

With her well-known naiveté, Ioana Petrescu, the minister of finance, may be playing some games that are standard fare on our capital market, by tinkering with the holding limit in the SIFs, which is a factor that is notorious for its direct influence on the price of the shares.

When, one month ago, she said that she would eliminate the holding limit in the SIFs, whereas she is now announcing that she has changed her mind, we are witnessing something that has been done over and over by now, and the only argument in favor of the fact that she hasn't done any market manipulation is the general belief that she is stupid, confirming the nickname she has been given - "Ponta's dummy". Otherwise, she should be investigated by the police, upon the complaint of the Financial Oversight Authority.

The updated version of the project for the amendment of the capital market law (297/2004), published on Friday, includes significant changes, "where it matters".

Within a month (from the date of the publication of the first version of the draft law), the Ministry of Finance realized that it doesn't actually want the elimination of the holding limit in the SIFs at all.

One wonders how did they come to the initial conclusion that the holding limit should be eliminated, and how did they then determine that change between the initial phase of the draft and the current stage?

In the notorious episode that happened at the Cotroceni Palace, Ioana Petrescu declined to provide president Traian Băsescu, who was insistently asking for them, with the study and the numbers supporting the proposed cut of the social security contributions, that the Government was endorsing. Even thought it is a bit inappropriate, in that particular case, the Minister of Finance can afford not to provide what was being asked of her, because her "estimates" would take a long time to be validated - people forget, Governments change and who else knows what might happen.

But on the stock market, the impact is immediate and visible for everybody.

But lo and behold, on October 8th, a date which was mentioned on the website of the Ministry of Finance, next to the project for the amendment of the capital market law, the shares of the SIF saw drops ranging between 0.32% and 1.40%, which does not match the moves that have occurred before, when a raising or an elimination of the holding limits was announced.

Upon a check of this discrepancy, in fact, on October 8th, the Ministry posted a revised version of the draft, while the initial version, published on October 7th, and reported by the press, has completely disappeared from the website, which is another proof bad faith, after the surreptitious conversion of the draft emergency ordinance into a draft law, on the same day of October 7th.

SIF stocks reacted like they always have whenever the information that the holding cap would be eliminated came out. On October 7th, they saw trading peaks, with shares posting rises ranging between 2.58% and 5.63%, after rising on the previous day as well.

The drops that followed on October 8th can be explained as being the result of the blunder of changing the emergency ordinance into a draft law, which would have involved passing the modifications through the Parliament, where they could have lingered for years.

On October 7th, the market was not provided equal access by the Ministry of Finance to information about these changes. At the time, some brokers were saying that by the end of the day they still didn't know that it was no longer a government emergency ordinance, but a draft law instead.

Furthermore, the option of amending the legislation of the capital market through a government emergency ordinance had started making the rounds, after, one day earlier, prime-minister Victor Ponta had said, on the Bucharest Stock Exchange that he was considering that option.

On Friday, November 7th, when the Ministry of Finance posted a different "revised version", in which they have abandoned the plan to eliminate the holding limit in the SIFs, the shares of the SIFs saw drops ranging from 0.05% to 1.93%.

The holding limit in the SIFs is not the only change in the draft of the Ministry of Finance, only the most obvious.

What is interesting is the fact that, the spokesperson of the Government, Corneliu Calotă at least, is aware of the fact that "fiddling" with the law of the stock market can produce effects on the Exchange. In a press briefing of October 21st, he was announcing that the prime minister had asked for points of view from the European Commission, the National Bank of Romania, the ASF and the Bucharest Stock Exchange, on the project of the Ministry of Finance: "Since this was a very important document which has quite significant effects on the market, all of the entities that had an interest in the matter were asked to express their points of view, in order to avoid subsequent discontent over the possibility of distorting the market one way or the other". At the time, he said that there were no changes compared to the initial version, which means that the plan to eliminate the holding cap in the SIFs was removed from the draft law in the last two weeks.