The cumulated weight of five Romanian companies listed at Bucharest Stock Exchange (BVB) and included to MSCI Frontier Markets 100 Index would increase to 3.38% by November 2014. This increase will reflect even better the developments occurring within Romanian capital markets and, also, is part of the changes in the methodology of calculating the index and the exit of two countries from the frontier markets category.
On July 30, 2014, Romania’s weight to MSCI Frontier Markets 100 Index was 2.23%.
The five Romanian companies included in the MSCI Frontier Markets 100 Index are Banca Transilvania (TLV), OMV Petrom (SNP), Romgaz (SNG), BRD – Groupe Societe Generale (BRD) and Transgaz (TGN).
MSCI Frontier Markets 100 is an investible index, used as underlying for more ETFs. The index reflects the performance of frontier markets and puts more emphasis on the trading characteristics. The revised methodology of MSCI Frontier Markets 100 Index became effective as of May 2014 and the transition to this will be implemented gradually in seven phases, ending in November 2014.
The new index methodology provides an increase in requirements for the minimum free float capitalization to around USD 240 million, based on January 2014 data. The number of member companies of the index can vary from 85 to 115 (compared to 100 in the previous structure), while the first two countries are allocated a maximum weight of 40% (compared to 50% in the previous structure). Currently, Kuwait and Nigeria have the highest weight in the MSCI Frontier Markets 100 Index.
“The review of MSCI Frontier Market 100 Index will be beneficial for Romanian capital market. The main objective of BVB, widely supported by market participants, ASF and the Government, is the MSCI upgrade of Romanian capital market to emerging market status”, stated Ludwik Sobolewski, BVB CEO.
In order to be upgraded, the Romanian capital market must meet a set of quantitative and qualitative criteria. Quantitative criteria stipulate that at least three listed companies should simultaneously meet all the requirements of size and liquidity (e.g. the market capitalization of the company, the market capitalization of the free float and a liquidity indicator). The companies that are closest to meet these criteria are Banca Transilvania, OMV Petrom, Romgaz and BRD-Groupe Societe Generale.