On Monday, the British multi-asset index provider FTSE Russell promoted Romania to the status of Secondary Emerging market and included two Romanian shares to the FTSE Global All Cap Index dedicated to emerging markets. Romania, previously a Frontier market according to the same index, was screened for inclusion as part of the Emerging Europe review. The reclassification could have a big impact on investors, as it signals the potential of future growth for the Romanian capital market and the the Bucharest Stock Exchange (BVB) could attract new investments from specialized investment funds on emerging markets.
During an event held by the Bucharest Stock Exchange, President Klaus Iohannis described the new status of Secondary Emerging market as a “strong signal of confidence for investors” and a “signal of hope and predictability for entrepreneurs”.
“I hope that this new status will translate into increasing stock market capitalization, so that our country becomes an important player in the financial markets of the region,” said the Romanian President in a message for the BVB event.
Present at the celebration, Prime Minister Ludovic Orban told the audience that his government will continue to support the further development of the stock market, Agerpres reports.
The Romanian companies that met the Global All Cap Index eligibility requirements are Banca Transilvania and Societatea Nationala Nuclearelectrica. The two companies will have to meet liquidity criteria in the following three months.
The new status was also welcomed by the Romanian Association of Banks (ARB), as shown in a press release of the association:
“The Romanian Association of Banks welcomes the implementation of the FTSE Russell decision on the promotion of the Romanian capital market to the Secondary Emerging market status, starting with September 21, 2020, alongside the inclusion of the securities issued by Banca Transilvania and Societatea Nationala Nuclearelectrica in the FTSE Global Equities Index Series (GEIS). The Romanian Association of Banks will continue to contribute to the development of the Romanian capital market and its strategic objective is to obtain full emerging market status from the profile institutions (FTSE Russell and MSCI).”
Analysts say that the reclassification of Romania as a Secondary Emerging market by FTSE Russell can be seen as a historic moment, as it will bring with it new opportunities for investments, and could draw in investment funds that manage hundreds of billions EUR which were previously restricted to invest on Frontier markets.