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Analysis: The dollar could reach 4.5 lei in the first part of the year
The Romanian economy will continue to grow in 2016 over the average of the EU but the American dollar could reach 4.5 lei in the first half of the year leading to the increase of prices of fuel and imported household appliances in dollars from Asia, an analysis made by Tradeville shows.
In the financial world, the BVB will be correlated to the foreign stock exchanges for which the perspectives are not so optimistic and in this context, the success of investments will depend more on the expertise and the competence of the professionals in the domain. According to the specialists of the company, at global level in 2016, the American dollar will continue to appreciate both by comparison to the major foreign currencies, as well as with the emerging and frontier ones, on the basis of the coming back of American economy and the increase of the interests by the Federal Reserve, in contrast to the Chinese economy which continues to slide down. ‘As long as the exchange Eur/Ron is stable, similar to what we saw after 2009, a possible depreciation of the exchange eur/usd would mean an appreciation of the usd against the Romanian leu. The exchange usd/ron could get to 4.50 in the first part of this year’.the analysis says.
On the other hand, this shows that, excepting some episodes of volatility, the price of oil will be in 2016 at ‘ exceptionally low’ levels after reaching the lowest level of over a decade, getting to 30 dollars/barrel, as at global level there is a huge excess of production and the demand which is mediocre.
‘On the other hand, the industrial products go badly for the emerging world,as the most important buyer faces economic and financial conditions even more adverse. Until emerging economies, specially China, do not come back it is unlikely to assist to an important growth of the quotations of the industrial products’ the Tradeville analysts say.
They draw the attention that, for the Romanian consumer, small prices of the fuel is not good news as such, as long as the American dollar continues to go up.In parallel, in the financial world, the good evolution of Romania at macro level should help BVB including the domain of consumption goods.
‘However, according to our opinion, BVB cannot separate from the external factors although the major trend should be that imposed by the EU and the US markets’ the analysis says.
On these markets the perspectives are not very good. The bonds markets benefitted from very relaxed monetary policies at global level. Now, however, the Federal Reserve grows interests in the US and the Central European Bank and the Japan Bank refuses to be important buyers of bonds on the local markets. In the absence of the support offered by the central banks, the general attention goes to the performance of the economies and the capacity of the companies to generate profits and dividends.
But global economies have a mediocre evolution.
The emerging economies confront recessions in some cases with no resemblance to anything. And China drops to rates of economic growth lower and lower, inimaginable some years ago. America and the UK ‘ shine’ in relative terms. The profits of the companies go down, and the dividends offered are contrasted at global level by increasing interests.
The bonds markets are not attractive either. The essential buyers disappeared from the markets. The central banks start to withdraw gradually. The emerging world has no excessof current account as in the past, so there are no American dollars to recycle in bond purchase. And, in the US the deflationist risks were not materialised.
The analysis shows that there are some characteristics of the Romanian market which could lead to differences of amplitude in the way in which the BVB indicators would imitate the movements of those outside the country.
For example, the volumes of trading very low for the majority of the listed titles onBVB stopped massive inflows of capital destined to stock exchange speculations, reason for which the pressure on sale due to possible withdrawals is unlikely. On the other hand, if the negative movements on the market tend to get amplitude, there is the chance that evey player could move the market significantly if he decides to reduce his exposure.
Moreover, on the local market, the companies in the electricity industry and the financial sector have an important share, at the level of capitalisation. With oil at reduced prices it is unlikely to see important growths in the prices of energy which should affect the producers of electricity, oil and gas. Less clear is the situation for the companies of utilities (such as transport of energy or distribution of energy or oil products) which could continue to offer dividends or even increase the volumes transported.
As regards the banking sector ( indirectly the real estate one) the estimates of the analysts fromTradeville were positive some months ago, but, with the voting of the law for the recovery of the real estate, there is the risk associated with this law. Hopefully the law did not pass as it was proposed, but it could create issues even without the provision which allowed its application for the contracts already signed. Thus, as the costs of the credits will grow for the natural persons who guarantee with the houses, both the profits in the banking sector and the prices and the development rhythm in the real estate sector will drop against the current estimates. This may be positive at the level of the macro-stability but for a short period of time it will influence negatively the value on the market of the affected companies.
‘ The possible IPO of big companies ( for example Hidroelectrica) are a wild-card for the interest referring to BVB. We have an electoral year and the government does not want to assume such projects, leaving it to those who get the elections. Moreover, the judicial or economic situation of the companies could be an impediment in the listing’ the analysis says.
Tradeville is leader on the market of online trading, being the first company in Romania to have developed an online trading platform.