by Doinita Dolapchieva
The Bucharest Stock Exchange (BVB), with a market capitalisation of some 31.1 billion euro by August 2015 and an average daily turnover of nearly 7.7 million euro, is the biggest bourse in Southeast Europe. Currently classified as a frontier bourse, it is undergoing upgrades with the view to receiving an emerging market status.
It’s been two years since you were appointed CEO of BVB. Looking back, what goals did you succeed in accomplishing and what did not go according to plan?
It would be difficult to indicate a single area which was left untouched. Every domain which is important for the efficiency of the infrastructure, and for the solidity of the capital market in the long run, has been addressed. I am speaking about regulations, trading systems, market data dissemination, education of individual investors, infrastructural mechanisms for liquidity creation, marketing towards international investors, and many others. Another aspect relates to the positive impact of our efforts on the liquidity and size of the market. I would like to underline that we have now in Romania several “acting agents”: the local regulator and supervisor (FSA – ASF), the Central Securities Depository, and a number of brokerage houses, keen to enhance their business.
What are your expectations regarding the planned sale of big state-controlled companies via the bourse?
Only if we privatise through the public market, we attract new investors and new funds, which are allocated not only to a company passing through a privatisation process, but also to other listed companies, because the market as a whole becomes safer and more attractive. The strategy of the BVB is to ease the access to the market for local individual investors, local institutional money and for global investors. All these three categories showed interest towards IPOs resulting from the privatisation process. We do not complain of not having enough clients. What we urgently need, are investment targets for them.
What are your expectations regarding IPOs of private companies by the end of 2016?
We expected a kind of turnaround in that area this year, but the market conditions have not been favourable. Despite this adverse situation we managed to open a new market for small companies, which has so far attracted four private companies, and some of them conducted limited private placements of shares. Now is a good time to strengthen our ties with potential entrepreneurs that are considering going public. We need to have better turnover in the secondary trading because there is always a strict correlation between the primary market and its ability to finance the issuers, and the effectiveness of the market for already listed companies. That is why the whole integrated reform is so important.
What are the main factors that affected the bourse’s development this year? What are your expectations for 2016?
2015 has been shaped by many negative factors. Against that backdrop even the intensive quantitative easing by the European Central Bank did not cause the expected results, in my opinion. The reasons reside in high instability. Greece, the Ukrainian crisis, the situation in the Middle East, prices on the markets of oil and gas, to name a few. Ultimately, when something like the crash on the Chinese exchanges happens – it was somehow too much for the equity investors. We will face a period of increased volatility and risk aversion on the part of investors. I have no idea how long it may last. Hopefully it will end soon. For the Romanian market it would be best if we return to more of the optimism which we benefited from in 2014, keeping however some of the current higher volatility.
What should BVB do to be included in the watchlist for the upgrade by MSCI and the FTSE Group?
The main, if not the sole problem, is the number of companies that must meet fairly demanding criteria imposed by the MSCI, concerning the market cap, the free float value and the daily liquidity in trading of those companies. Practically we can accomplish that only if the privatisation of the blue chips is resumed and, as a necessary complement, if the free float in some of the already listed blue chips is increased.
Do you think the Zagreb Stock Exchange could dethrone BVB as a regional leader following the recent acquisition of the Ljubljana bourse?
I hope that our colleagues from Zagreb will run very well the merged platforms because it will only motivate us for new achievements.
Will the launch of the SEE Link, scheduled for the beginning of 2016, influence the Bucharest bourse in any way?
I think it will be completely neutral for the BVB and our markets.