Bucharest Stock Exchange Lost over EUR3 billion, Whole Year's Gains in Wednesday Session

Some EUR 3.1 billion were erased on the Bucharest Stock Exchange (BVB) on Wednesday, a day after the Romanian government announced a draft ordinance bringing major changes to taxation and other corporate regulations, less than two weeks before the new year. Energy and banking institutions were most affected by the BVB blow in the wake of the government announcement, which mainly affects banking, energy, telecom and insurance companies. The BVB lists many companies where the Romanian state still holds key stakes.

The capitalisation of companies on the main market fell by over RON 14.8 billion to 145.8 billion in one day. It is the hardest one-day fall since January 7, 2009, when the BVB closed with a loss of 12.29% for its key index as the international financial crisis unraveled at the time.

Brokers, analysts and market participants are looking at crashes that remind of the financial crisis of 2007-2008 but are the consequence of patching up an overly generous state budget for Romania, which is the second-poorest country in the EU.

Finance Minister Eugen Teodorovici on Tuesday evening announced new taxes on bank assets, energy and telecom companies, which he intends to use to patch the holes in the 2019 budget.

The government also seeks to cap power and natural gas prices. It also hit private pension administrators, the main institutional investors on the Romanian capital market, by planning to allow contributors to withdraw their retirement money early.

Developed by Codecraftsman