Investment fund with 100 million euro budget for Romania cancelled plans due to events

Events in the Romanian political stage determine investors who planned to invest in Romania to postpone their decision and focus on other markets until they see more stability in the country, or expect larger incomes with the increase of risk premium, Coface specialists say.

“In the light of the latest events, we received several phone calls yesterday from international investment funds,showing their concern towards what would happen next, as they have less predictability and signals do not encourage long term investments. One of the funds declared it had an allocated budget of 100 million euros for investments for company takeover in Romania, this year, but they cancelled any investment and stopped present projects. Events create expectation, tension and it is important that all that happens now should stabilize, not escalate to a political crisis which, besides short term negative effects it may yield dangerous long term signals about the lack of predictability and discouraging investments,” said Iancu Guda, service manager and senior economist at Coface Romania on Thursday.

In his turn, Eugen Anicescu, country manager Coface Romania, says that global investors have got used to shocks lately and have learned how to handle them, but that also supposes orientation toward safer markets.

At the same time, risk premiums grow in agitated periods of time and investors expect higher profits.

Anicescu also mentioned that at global level, the challenge of 2017 depends on uncertainty superposed now on “a very hot environment in Romania”.

In his opinion, uncertainty is generated by the two important events of 2016, the British vote in favour of Brexit and elections in the US with the “Donald Trump surprise”, events whose consequences are not clear yet for the other economies in the world.

To those two events we can add, according to the Coface representative, this year’s elections in Germany, France and the Netherlands, whose results might increase uncertainties.

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