Analysts: Romania ranks first among world frontier markets as returns exceed 40 pct

Georgiana Bendre 25/07/2017 | 13:56

Romania ranks first among world frontier markets, considering the growth returns that exceed 40 percent year to year date, according to the Bucharest Stock Exchange.

Romania’s equity market is profiting from the positive macro backdrop. BET Total Return (BET-TR) index, which also includes the dividends distributed by the most traded companies listed on Bucharest Stock Exchange (BVB), has grown by over 40 percent in USD terms year to date and thus it reports the fastest growth among all 23 MSCI Frontier Markets Index countries, a Berenberg analysis shows based on Bloomberg data. The increase comes from the two-digit dividends for several companies together with the market upgrowth as the main index BET reached a 9-year high.

“When it comes to most dynamic capital markets, Romania is the place to be not only in Europe but also in the world for the investors who target growth. The Romanian capital market can accommodate growth and substantial amounts of money in the same time, and it’s not only about equities but about bonds as well. At the same time, we want to attract the attention of entrepreneurs so they don’t miss this unique opportunity of financing through the capital market and thus acquire a new business dimension,” said Ludwik Sobolewski CEO of BVB.

Romania has a great opportunity to be upgraded from Frontier Markets to Emerging Markets, says Carsten Hesse, EME Equity strategist at Berenberg.

“This would be a game changer for the Romanian equity market as a lot more international investors would start to invest in Romania as seen in Qatar, UAE and Pakistan which were upgraded over the last years. To increase the speed and the likelihood of Romanian being upgraded to EM status, it would be very much appreciated if there would be more large scale privatisations and IPOs on the Bucharest Stock Exchange such as Hidroelectrica and the Bucharest Airport, as well as a reduction of the governments stakes in e.g. OMV Petrom, Romgaz and Electrica to increase the free float,” Hesse concluded.

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