Romanian stock market, on the rise

The Bucharest Stock Exchange is preparing to list the energy giant Hidroelectrica

Sorin Iordan, 20.06.2023, 14:00

Romania’s capital market went up 7.1%
in the first 5 months of the year, as the number of investors hit a new record,
the Bucharest Stock Exchange announced. The context is highly favourable for
the upcoming listing of the country’s largest electricity producer, Hidroelectrica,
which is expected to draw substantial capital as of July.

Eight million Romanians will be
able to benefit from the listing, thanks to the stock to be purchased by
private pension funds, and a large number of business people will be able to invest
directly in the company, the Bucharest Stock Exchange president Radu Hanga
said.

According to Hanga, Hidroelectrica’s
standing and the size of the transaction, expected to reach some EUR 2 bln,
indicates that the local stock market has grown to maturity, and the success of
the operation will contribute significantly to strengthening the confidence of
local entrepreneurs and investors in the potential of the Romanian capital
market.

The Hidroelectrica IPO (Initial
Public Offering) will be the most important event in the forthcoming period
for Romania, in economic terms as well as in terms of image, and one of the biggest
in the world at the moment, the Bucharest Stock Exchange chief also said.

Hanga explained that the transaction
is critical for Romania, with significant implications for the country’s
inclusion in the MSCI emerging markets index. At present, MSCI rates Romania as
a frontier market, whereas the second-largest relevant company, the FTSE, upgraded
Romania to secondary emerging market status in 2020.

The sale by the Proprietatea Fund of
its 20% share in Hidroelectrica takes place in a positive context. The number
of investors in the Romanian stock market was over 141,000 at the end of the
first quarter of 2023, compared to nearly 54,000 in 2019. This accounts for a 160%
rise in the past 5 years.

Also, overall listings with the
Bucharest Stock Exchange amounted to over EUR 1.8 bln in the first 5 months of
this year, in spite of international market volatility. As many as 7 corporate
bond issues for a combined EUR 1 bln, and 5 Fidelis state bond issues totalling
EUR 618 mln. were listed. Over the past 5 years, the Bucharest Stock Exchange
has listed 163 financial instruments amounting to a combined EUR 8 bln,
offering investors returns of over 100%. (AMP)