What would the BSE do without the Proprietatea Fund?

The Bucharest Stock Exchange has concluded the last quarter of 2012 with a loss of 0.46 million lei, after posting a profit of 1.15 million lei in the similar period of 2011, according to the preliminary statement published yesterday, meaning that the annual profit only amounted to 8.98 million lei, half of what it was last year.

Both the brokers and the BSE, are blaming the earnings on the drop in turnover, in a year where the Proprietatea Fund continued to be the most liquid issuer, assuring almost half of the turnover.

The profit obtained last year will allow the distribution of dividends to shareholders, the report of the BSE states, and the net profit of the market operator per share was 1.17 lei/share.

Lucian Anghel, the president of the BSE, said in a press conference, last week, that we need to consider that the stock market has been heavily influenced by outside factors, as well by the domestic political context.

"There is the opinion that 2012 has been a disastrous year, but I think we should also take into account the domestic context", said Lucian Anghel, who went on to say: "This has been a special year: we have had three governments, the privatizations have been postponed, the sale of Oltchim has failed, Hidroelectrica entered insolvency. These are the elements which have influenced the market, on a local level. We should also take into consideration that the Eurozone has entered a recession, and it is impossible for Romania not to be affected. The FED and the Central Bank have taken the necessary steps to inject liquidity into the capital, and even so, liquidity fell. Under these circumstances, the evolution of the indexes was very good".

Last year, the BET index, of the most liquid stocks, rose 18.74%, compared to a drop of 17.68%, in 2011.

Last week, the president of the BSE also said that 2012 ranked second in the last four years in terms of the daily trade turnover (6.6 million Euros/day).

• BVB: The drop of trading revenues was offset by the increases in revenues from the admission and maintaining of issuers

The turnover of the BSE reached 17.51 million lei in 2012, down 19.5% compared to 2011, due to the reduction of revenues from trading.

The exchange said: "These drops were partially offset by increases in the admission and maintaining of the issuers listed on the platform".

Operating expenses have amounted to 13.5 million lei, in 2012, down 12.1% than in 2011, due to the measures taken to improve efficiency by reducing staff, advertising, provisions and amortizations expenses, according to the quoted report.

The steeper drop of the operating revenues compared to preliminary operating expenses led to a preliminary profit of 4.06 million lei, down 36.4% compared to 2011.

This evolution has also been influenced by the lower number of trading days in 2012 compared to 2011, as well as by the fact that in 2011 operating revenues included a non-recurring element of 0.95 million lei resulting from VAT corrections for some data dissemination services.

Interest revenues have been influenced by the drop in the revenues of the BSE following the payment in 2012, of record dividends out of the net profit turned out in 2011.

• Nicu Grigoraş, "Intercapital Invest": "The results of the BSE, are extremely telling for how the 2012 was like"

The financial results of the BSE, are extremely telling for what 2012 was like for the entire domestic capital market, said Nicu Grigoraş, senior broker at "Intercapital Invest".

He said that the drop in general liquidity of the market had direct consequences on the turnover of the BSE, and the drop in the banking interest rates has caused profitability to fall even further.

Nicu Grigoraş said: "The trading revenues of the BSE have fallen slower than the turnover of the stock market, thus the results can be considered satisfactory".

In his opinion, if the year 2012 will be proven to be the year the crisis was overcome, if the investors will return with further investments in Romania and in the neighboring countries, the outlook for the following years, including 2013, should improve.

The results announced by the BSE are the best reflection of how the market evolved in the previous year, Mihai Mureşian, trading director at "Intercapital Invest" also said. In his opinion, there will be no substantial improvement in the earnings of the BSE, unless the process for the listing of the companies owned by the state is sped up.

• Simion Tihon, "Prime Transaction": "The earnings of the BSE, in line with the evolution of the market liquidity"

The earnings of the BSE are in line with the expectations and with the evolution of the turnover, Simion Tihon, broker at "Prime Transaction" considers.

Last year was dominated by apathy, with many sessions being characterized by very low turnover, he said.

Simion Tihon said: "The financial results fell by half, the main reason for that being that in 2011, the dividends earned from the Central Depository had a one-off nature".

As for the outlook for 2013, he said that an optimistic attitude is hard to take. Simion Tihon considers that aside from the projects with long term results, the BSE also needs a favorable foreign context.

• BVB: "The market has been affected by the reluctance of investors to invest in countries with potential difficulties in financing their deficits"

On an international level, towards the end of 2011, the financial markets were stimulated by the measures taken by the Fed and the European Central Bank, so that towards the end of the year, the market capitalization had recovered over 15% compared to 2011 (in dollars), according to a report by the World Federation of Exchanges.

The report of the BSE states that the capital market was affected by the wariness of investors to invest in countries with potential problems in financing their deficit. The foreign factors have also been compounded by the political events, as tension intensified in the second and third quarters, and gradually falling after the parliamentary elections and the installation of a new government, in December: "All of these things have influenced the Romanian financial markets, as in Q2 2011 the leu weakened significantly against the Euro and the dollar. Following this depreciation, the investors avoided the stock market, which led to significant drops when it comes to volume and turnover".

The stock market (including the DEAL segment) saw a drop in trade volume by 30.8% in 2012, down to 7.2 million lei, compared to 10.4 million lei in 2011, according to the reporting.

"The Proprietatea Fund (FP) has remained the most traded stock in 2012 as well, with 46% of the total turnover, followed by BRD with 8%, SIF Transilvania (SIF3) and OMV Petrom (SNP) each with 7%, and SIF Moldova (SIF2) with 6%", the report also shows.

The structured products segment saw increases in the total volume, of up to 687.4 million lei, up 57% over 2011.

Stock market turnover fell by about 30%, but trading revenues only fell 20.7% in 2012, compared to 2011.

• Seasonal drops, in Q4

The turnover of the BSE was 3.53 million lei, in Q4 2012, down 27.1% YOY, amid a seasonal drop in trading volume, the quoted document states. Operating revenues fell 26% in Q4 2012, compared to the similar period of 2011.

Between October and December 2012, operating revenues amounted to 4.32 million lei, down 17.2% over Q4 2011.

The strengthening of the Romanian currency against the main currencies in the last part of 2012, has led to unfavorable exchange differences of 0.74 million lei, which were compensated by the interest revenues of 0.8 million lei.

The BSE had total assets of 97.95 million lei on December 31st 2012, compared to 106.22 million lei, at the end of 2011.

The debts of the BSE at the end of 2012 amounted to 2.41 million lei, down 7.3% compared to the end of 2011.

The BSE has a share capital of 76.7 million lei, divided into 7.67 million shares, with a face value of 10 lei/share.