Romania, upgraded to Secondary Emerging Market
Romania has been reclassified from frontier market to secondary emerging market and it is expected to draw more investors.
Daniela Budu, 21.09.2020, 13:50
The Romanian stock exchange market has been upgraded from frontier to secondary emerging market status. FTSE Russell, one of the leading stock indexes providers in the world, aannounced the upgrade last September when Romania met all necessary criteria and following three years of monitoring of the transactions of the main companies listed on the Bucharest Stock Exchange (BVB). Lucian Anghel, head of the BVB Board at the time, said that in economic terms, the upgrade was for the stock exchange market as important as the moment of Romania’s EU accession.
The first two companies that met the Global All Cap Index eligibility requirements are lender Banca Transilvania and energy producer Nuclearelectrica, which will have to further meet the liquidity criteria in the next three months. According to experts, Romania’s reclassification as secondary emerging market can be seen as historic, as the new status means new opportunities for investment. Funds that manage hundreds of billions of euros can now invest in Romania in the upcoming years. Previously there were restrictions in place for such funds investing on frontier markets like Romania. Experts say that this upgrade is a step forward for the Romanian stock exchange market in reaching maturity, as now it is in the same category with the stock exchange markets of some powerful economies such as China, Russia and other dynamic states in Asia and South America. Moreover, analysts say that this reclassification, due to the funds it may draw, could contribute to the financing of big projects in the real economy.
The Romanian Stock Exchange Market was set up in 1882. Throughout its history, its activity was affected by social and political events and then seized during WWI. After being reopened, it had 7 years of significant growth, followed by 7 years of accelerated decrease. Its activity was again interrupted in 1948, when the communists seized power in Romania. The Bucharest Stock Exchange was again set up, in 1995, after 50 years of inactivity, and only had six listed companies.
In the first eight months of 2020, the total trading value on BVB was 6.9 billion lei, the equivalent of 1.44 billion euros. In terms of daily liquidity, mirrored by the average daily trading volume, it stood at 8.7 million euros during January and August 2020. (Translated by Elena Enache)
