Stock Exchange Review

This week the markets were awaiting the outcome of the Federal Reserve meeting on Wednesday and the ongoing negotiations between Greek authorities and private bondholders.

In Romania the market followed the developments of the international markets and moved higher, led by the Property Fund (FP), OMV Petrom (SNP) and SIF Oltenia (SIF5) with gains of 5 to 6 percent. The Ministry of Economy gave the promoting rights of the long awaited Romgaz IPO to the consortium formed by Goldman-Sachs, Erste-BCR, and Raiffeisen Capital&Investment.

The Property Fund has been in a downtrend for almost a year, trending down from RON 0.67 to 0.41. But the slide ended on 6 January when the sellers finished their downside pressure and the buyers started becoming more aggressive. I expect this newly formed uptrend to encounter its first price resistance around RON 0.48 followed by RON 0.51.

Chart 1

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The price of SIF Oltenia (SIF5) looks like it is forming an ascending triangle with resistance around RON 1.21 and the first support around RON 1.12. The best trade is to wait for a break-out of this formation and transact in the direction of that break-out, with the price target RON 1.32 for upside break-out and RON 1.00 for downside breakout. With the international markets being on an uptrend I give more chance to the upside breakout.

Chart 2

Important economic data next week:

Monday 30 January – ROM – Economic activities trends (for January)

Tuesday 31 January – CHINA – Official Manufacturing Index (for January)

                                          – ROM – Unemployment Rate (for December)

Wednesday 1 February – USA – ISM Manufacturing Index (for January)

Thursday 2 February – ROM – Romania National Bank – Interest rate decision

Friday 3 February – EU – Retail sales (for December)

                                      – USA – Unemployment rate and newly created jobs (for January)

                                      – USA – Factory orders (for December)

Next week I’m expecting the China manufacturing data to have an impact on the worldwide markets, as there are rumors of a bigger slowdown in China’s economic activity. After that market players will wait for the USA employment report on Friday which will outline the strength of newly created jobs in the USA. In Romania I’m expecting Mugur Isarescu to keep the rates on hold and the market in general to correlate with the international ones.

Vasile Szakacs

Private consultant of stock market investments and owner of www.consultantabursa.ro which provides consultancy services for would-be investors, both Romanian and foreign.