Stock Exchange Review – The sky’s the limit

Last week started with a bang, when Prime Minister Emil Boc announced his resignation. Surprisingly, the EURO-RON exchange rate reaction was fairly muted.

The Romanian stock market responded quite badly initially with the BET-FI index (which comprises SIF1, SIF2, SIF3, SIF4, SIF5 and the Property Fund) falling close to 4 percent immediately following the announcement of the resignation. But as the day progressed, the markets recovered based on the prospective new government that will soon take shape. As the next few days passed the markets continued to move higher and higher, culminating with a gain of 3 percent on Thursday when the new Prime Minister Mihai Ungureanu and his cabinet were voted in by Parliament. Overall the BET-FI index posted an almost 8 percent rise from Monday to Thursday.

Chart 1

As you can see from the chart, the BET-FI index is entering an ascending channel and every investor should be safe as long as this channel holds and no downside break-out happens.
The next chart shows the yearly BET-FI chart starting in 2001. As you can see from the line, the decade-long Bull Market is impressive and still continues.

Chart 2

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Important economic data to be released next week:
Mon 13 Feb       ROM – Balance of Payments
Tue 14 Feb        EU – German ZEW Economic sentiment (for February)
                              EU – Industrial Production (for December)
                              GBP – Consumer price index (for January)
                              US – Retail sales (for January)
Wed 15 Feb      EU – French, German, Italian GDP
                             (for the fourth quarter of 2011)
                              USA – Industrial production (for January)
Thu 16 Feb       USA – Producer price index (for January)
                              USA – Philadelphia manufacturing index (for February)
Fri 17 Feb         USA – Consumer price index (for January)
    
Next week I’m expecting good economic results to push the markets even higher. The problematic yields of government bonds from Spain and Italy have eased to comfortable levels. The Greece saga seems like it might be coming to an end and because no other dark clouds are looming at the horizon I predict the markets will go higher and higher and the Romanian market will continue the uptrend.

Vasile Szakacs

Stock market analyst, trader and owner of www.consultantabursa.ro, which provides consultancy services for Romanian stock market investments www.consultantabursa.ro, which provides consultancy services for Romanian stock market investments