Can you tell us what are the main accomplishments of the Bucharest Stock Exchange since its establishment?
There are a lot of accomplishments for the Bucharest Stock Exchange. From the very beginning we attempted to create a modern stock exchange, a serious organization able to respond to the needs of the companies that want to raise capital but also to the investor's needs. Therefore we created a modern stock exchange based on a good technical support. Our trading system is a fully computerized one. We started with remote trading. After one year most of the brokers started to trade from their offices, and as you can see there is no longer a floor here in the stock exchange. We have a good and trading system. This year we moved to a new trading system that is compatible with the year 2000 and also very flexible and friendly. It is able to interconnect our trading system with other exchanges in the region or in the world and offers a lot of facilities for the brokers, participants and investors. It is very similar with the other trading systems in the developed countries.
From the regular trade point of view we have regulations in place that give sufficient protection to the investors and transparency to the market. As far as the companies listed at the Bucharest Stock Exchange, we have about 125 companies listed, which is a good size. Maybe the quality of these companies should be improved. All of them have been listed based on listing requirements met we have tried to list the best companies in Romania at this moment - potential companies will be listed. There are not only Romanian or public companies. As you know all the public companies meet listing requirements. However in the Bucharest Stock Exchange we cannot yet find the biggest companies in this country because companies like major banks, oil companies, and communication companies or the so-called utilities are not yet private. There are some signs that this year some of these companies like Romanian development Bank will enter the market.
According to the SOF (State Onwership Fund) all the companies are going to be privatized by the end of 2000. Do you think this is plausible?
I think the privatization is a good movement for the Bucharest Stock Exchange but we are not really interested in small or medium companies. If they are private, of course, this is good for Romania but it does not necessarily mean that they are also good for the Bucharest Stock Exchange. Investors are looking for big and attractive companies that bring liquidity to the market. Privatization will speed up but the most interesting thing for Romania is the privatization of the good and big companies representing sectors like banking, industry, communications, oil industry, etc.
I have mentioned the Romanian Development Bank (RDB)because this bank is already private - the shares have been taken by the Société Générale, but the State still holds around 10-12% that are going to be sold through the market. This means that the RDB will be listed and there are some big initiatives in time to do that. In June, July or August 2000 they will probably be listed the Bucharest Stock Exchange. We are really interested in such a company because it will bring more capitalization to the Bucharest Stock Exchange and I suppose it will also bring more liquidity on the market.
Another company we are interested in is the Romanian Oil Company -Petrom - that is on the way of privatization. We do hope that this company will also be listed on the market. I suppose that companies such as Petrom or RDB will also be listed on other markets through Global Depositor Receipts programs. There are plans for some attractive Romanian companies to be listed at the same time in the London and New York Stock Exchange and on the local one. This can also bring more attention from foreign investors.
What are the requisites for a company be listed?
There are some listing requirements. Based on them, a company should be rated "qualified" by the Romanian Security and Exchange commission as a public company. After that the companies have to disclose any financial information, they have to have experience of at least three years of activity, net profits for the last two years, audited financial report, and a lot of data and information about their management. They have to disclose any price sensitive information and a minimum number of shareholders. More or less we have the same listing requirements as any other developed stock exchange. Petrom has almost one million shareholders. RDB will also have through public offer quite a large number of shareholders.
In which way do you compete with other stock exchanges?
Due to the globalization the small and medium exchanges should compete with each other and also with major exchanges. One of the main reasons that a company would be listed on an exchange is to have an easier access to capital and for this reason the company would choose a market that offers it a lower costs, i.e. easier access to funding. |
In order to have a big exchange with large capitalization you must have strong companies. The companies are free to choose the market. As you can see in Central European countries a lot of major companies are listed on several stock exchanges. We cannot make them our prisoners only because they are Romanian companies. From this point of view as a local stock exchange we have to offer an easy access tot the market and have low costs for the company.
We are competing with other exchanges in the region and in the world. About the competition with the other local market, Rasdaq, I think at some extent we can talk about competition but the markets are rather complementary because the main purpose of Rasdaq, created in 1996, was to create a market for the companies issued through the mass privatization process. We are talking about 6,000 companies that are listed on this market, although actually there were not any listing requirements. The companies were listed automatically. The only reason they were put on this market was to give to the 15 million shareholders (the adult population of this country) the possibility to buy and sell their shares, hence we cannot talk about listing requirements. There you can find small companies with very few shareholders as well as big companies because they were listed there automatically.
In comparison with these stock markets the Bucharest Stock Exchange is a real Exchange. We did not established a stock exchange to necessarily respond to the mass privatization process, but rather we have created an exchange in order to respond to the companies and their financial needs and to give the investors a place where they can put their money, invest and get a return. There are quite a lot of differences between the two markets.
Many companies are in need of capital. In which way do you think that foreign investors could invest through the stock exchange? What do you offer to them now and what could be improved?
We are offering them now the companies that are actually listed in the Bucharest Stock Exchange, a proper clearing and settlement system, we can assure them that their money and shares will be kept safely in banking accounts. As far as the performances of these companies is regarded, of course it is up to them to analyze each company. There are not too many companies that are very attractive for them yet. We still do not have here in the stock exchange utilities companies, communications or the major banks. That is why I am quite optimistic that once these companies will be listed in the Bucharest Stock Exchange, the market capitalization and the liquidity of the market will increase.
In 1997 we experienced a good performance in the Bucharest Stock Exchange with more or less the same listed companies. At that time the investors were attracted by the companies and fully believed in the economic program launched by the Government. Foreign participation was then 80%. Now it is between 30% and 40%. We do think that we can bring again their attention to the Bucharest Stock Exchange. From the technical and regular trade point of view we are a very serious and transparent organization and we will shortly be able to offer them good products and shares. We are trying to diversify our products and to introduce on the market other instruments such as corporate bonds and governmental securities. With our technical system we are ready to accommodate trade with such instruments as corporate bonds. Regarding the State securities, the Government should agree on the Bucharest Stock exchange as a secondary market for such items. We are fully prepared to accommodate such trades - it is just a question of agreement among the Government, the Ministry of Finance and certain banks.
How do you see the development of the Romania Stock Exchange for the year 2000?
The stock exchange will continue to reflect the macro-economic situation. We have to look at the main figures such as the inflation forecast, inflation rates, interest rates and GDP, and if we really believe in that, we have to accept that the Bucharest Stock Exchange will follow the trends of the economy. On the other hand the performance of the companies listed at the Bucharest Stock Exchange will grow this year together with the economic climate. The Bucharest Stock Exchange cannot be worse than the economy is. If the economy is growing I think the Bucharest Stock Exchange will give the real sign and will follow the economic trend. On certain periods of time the stock exchange indicators maybe surpassed by the economic trend sometimes, other times we will lag behind, but based on our experience we have seen that the Bucharest Stock Exchange goes in line with the economy.
Do you have a final message you would like to transmit to our readers?
The Bucharest Stock Exchange (the Romanian capital market) is a serious organization and it is conceived to respond to the foreign investors needs. I am sure they will find here a safe and transparent market place with a big potential where they can be easily accessed by banks. |
BUCHAREST STOCK EXCHANGE