Bucharest stock market partially reverses loses as banks’ shares rise

Sorin Melenciuc 24/12/2018 | 14:16

The main indexes of Bucharest Stock Exchange (BSE) reverses on Monday some of last week’s losses as investors regain interest in local banks energy firms despite worries about the new taxes introduced by the government in 2019.

At 2:00 PM, BET, the index including the main 15 companies listed on the market, gained 7.05 percent to 7,455.99 points. Banca Transilvania, which lost more than 20 percent of its value last week, rose on Monday by 11.9 percent, while BRD gained 11.85 percent.

Energy firms are also on the recovery path. State-owned Nuclearelectrica’s shares appreciated by 1.3 percent.

Romgaz, one of the biggest state-owned companies, rose 3 percent recovering some of last week’s losses, while OMV Petrom, control by Austria’s OMV, gained 10.7 percent.

Black Wednesday

On Wednesday, following the announcement of new taxes on banks, capping gas price and major changes regarding private pensions scheme, BSE’s main indexes and shares crashed in one of the worst days in Romanian stock market’s history.

Banca Transilvania, the bigger Romanian bank in terms of assets, lost 19.9 percent at the closure of the market session, while BRD-Groupe Societe Generale fell 16.6 percent, in a session called by analysts and journalists “the Black Wednesday.”

This means that investors lost close to EUR 3 billion in one day. Following the 3 days in the red (from Wednesday to Friday), Banca Transilvania’s value declined in 3 days by more than EUR 500 million, from RON 11.3 billion (EUR 2.43 billion) to RON 8.85 billion (EUR 1.9 billion).

OMV Petrom’s value decreased in the same period from RON 19.7 billion (EUR 4.2 billion) to RON 16.3 billion (EUR 3.5 billion).

The Financial Supervisory Authority (ASF), whose chiefs were imposed by the main ruling party, has announced that it will verify all transactions made in the day before the crash of the stock market for possible inside informations.

Greed tax, new taxes for energy and telecom firms

On Tuesday evening, the Finance minister Eugen Teodorovici said that the Romanian government will introduce a tax on bank assets of 0.9 percent from January 1st, 2019, and will cap the retail and corporate gas price at RON 68/Mwh.

Visibly stressed during his presentation and refusing to answer to reporters’ questions at the end of his long speech, Teodorovici presented the new tax on bank assets as a “tax on greed.”

On Friday evening, the new measures were approved by the government in an extraordinary meeting.

ROBOR maintained above the 3 percent in Romania during most part of this year as inflation rose to the highest level in the EU so banks will have to pay a 0.9 percent-tax on assets if the measure is imposed since the beginning of next year.

The Finance minister also said that the government will cap internal gas price at RON 68/Mwh for retail and corporate domestic markets alike, and imposed special taxes of 2 percent of turnover to energy firms and of 3 percent to telecom companies.

Experts say that capping internal natural gas prices will hit hard the two main gas producers in Romania, Romgaz and OMV Petrom, and will limit investment in gas fields, while the advantages for retail consumers are only for short term.

EU competition legislation bans such practices and energy directives impose a liberalization of gas prices, which Romania had already done by April 2017.

If the proposal passes, Romania may risk infringement procedures by the European Commission.

Experts also argue that such a measure will favour gas imports from Russia.

Households in Romania paid in 2017 the lowest prices for gas and the fifth lowest prices for electricity among the 28 European Union member states, according to Eurostat.

The government has not released until now a budget project for 2019 and many experts say it has no money to finance its soaring spending on public servants’ wages and pensions.

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