Romania’s stock exchange maintains double-digit annual growth despite deep war losses

Romania’s stock exchange maintains double-digit annual growth despite deep war losses
By Iulian Ernst in Bucharest March 14, 2022

The main index of the Bucharest Stock Exchange (BVB), BET, still boasted a robust 12.6% y/y annual advance as of March 11, despite the 9.7% m/m decline seen over the past month following the Russian invasion of Ukraine and the subsequent economic turmoil.

The BET-TR index, which includes the dividends disbursed by the listed companies, advanced even more — by 20.7% y/y — and the impact of the war in Ukraine was slightly smaller at -8.5% m/m.

In its February monthly bulletin, the BVB highlighted the resilience of its listed companies to the COVID-19 crisis. As of the end of February, it reported a 55% advance for the BET-TR index compared to the end of February 2020, when the first COVID-19 case was reported in Romania, and +39% for BET.

Furthermore, “the investors reacted in a narrow corridor to the intensification of the military conflict in Ukraine,” the BVB wrote, based on data as of the end of February. 

From -2.01% as of the end of February, the ytd performance of BET-TR deteriorated to -5.7% at the end of March 11.

“It is important for Romanian investors not to react emotionally with their savings, but to follow their own investment strategy in accordance with their risk profile. In an international context marked by volatility, a forward-looking investment strategy will provide more clarity and security,” said Adrian Tanase, CEO of the Bucharest Stock Exchange.

Among the key events related to Romania’s capital market in February, the Romanian Senate adopted a legislative proposal to simplify the taxation of investors on February 2. Of the 120 senators present, 118 voted in favour, there was one abstention and one vote against. The legislative proposal will go to the Chamber of Deputies, the decision-making forum. The bill provides for the withholding tax on capital gains for individual investors to be retained at source, with two tax levels, i.e. 1% for holdings over one year and 3% for holdings of less than one year, while losses won’t be compensated. The obligation to calculate, withhold at source, declare and pay the tax will fall on the intermediaries and fund managers.

Also, the first environmental, social and governance (ESG) scores on the local capital market became available as of February 8 on the BVB Research Hub platform. The scores are part of the reports prepared by Sustainalytics, one of the global leaders in the segment of ESG research and ratings, based on the collaboration with BVB, initiated in 2020. The scores are published on a voluntary basis and eight of the companies listed on the Bucharest Stock Exchange joined the project at this initial stage: Antibiotice Iasi, BRD Groupe Societe Generale, Farmaceutica Remedia, Nuclearelectrica, OMV Petrom, TeraPlast, Transgaz and Bursa de Valori Bucuresti.