The Romanian capital market anticipating Hidroelectrica IPO. 7 percent growth and new record of 140000 investors

• The capital market in Romania increased in the first 5 months by 7.1% according to the BET-TR index, which also includes dividends. Also during this time, BET-NG, the index of energy and utilities companies, was up 10.7%. All indices of the Bucharest Stock Exchange (BVB) were in positive territory at the end of the first 5 months of this year.

The Romanian capital market grew by 7.1% in the first five months of this year, taking into account the BET-TR index, which also includes dividends. At the end of the trading session from May 31st, BET-TR showed a level of 24,301 points. Also during this time, BET-NG, the index of energy and utilities companies, was up 10.7%. Although the increase registered at the end of May at the general level of the market took place against the background of decreasing liquidity, all indices of the Bucharest Stock Exchange (BVB) were in positive territory at the end of the first 5 months of this year.

The number of investors in the capital market in Romania continued to grow and reached over 141,000 investors at the end of the first quarter of 2023, according to data from the Investor Compensation Fund (FCI). By comparison, in 2019 there were almost 54,000 investors. This represents a 160% increase over the past five years. Moreover, the figure of 141,000 investors represents an all-time high for the capital market in Romania.

As far as liquidity is concerned, at the overall level it can be seen that the total trading value with all types of financial instruments reached RON 7.5 billion, the equivalent of EUR 1.5 billion, but this figure is down by 24% compared to the first five months from last year, against the background of investors’ expectations regarding the future IPOs announced at BVB, of which the most significant corporate event is the anticipated listing of Hidroelectrica, the largest electricity producer in Romania.

The total value of the 15 listings made on the Bucharest Stock Exchange (BVB) exceeded EUR 1.8 billion in the first five months of this year, a period marked by volatility in the international capital markets. In the fixed income segment, 7 issues of corporate bonds were listed with a cumulative value of EUR 1.12 billion, 5 issues of Fidelis government bonds in the value of EUR 618 million, and one issue of municipal bonds worth EUR 112 million, and on the equity segment there was a listing worth EUR 1 million. Fixed income instruments contributed significantly to the total trading value recorded in the first five months at the BVB, driven in particular by the continuation of the Fidelis government bond issue program, but also by the revitalization of the corporate bond segment. Looking at the evolution of stock and bond listings, 163 financial instruments were listed on the BVB in the last five years with a cumulative value of EUR 8 billion.

Radu Hanga, President of the Bucharest Stock Exchange said: „Eight million Romanians will be able to benefit from the listing of Hidroelectrica through the shares held by private pension funds and a large investment community will be able to invest directly in the company, thus benefiting from all the perks of a company listed on the stock exchange. Hidroelectrica’s reputation and the anticipated very large size of the transaction show that the local stock market has reached a high level of maturity and attractiveness. The success of an offer of the size of Hidroelectrica will significantly contribute to increasing the confidence of local entrepreneurs and investors in the potential of the capital market. Listing on the stock exchange opens up new opportunities, including for Romanians who want to buy and hold shares in one of Romania’s strategic companies.”

Adrian Tanase, CEO of the Bucharest Stock Exchange said: „The historic IPO of Hidroelectrica will be the most important event in the coming period for Romania from an economic point of view and from the image capital that we can consolidate among major international investors. Hidroelectrica’s stock market listing will be possible after the successful completion of the largest IPO ever made in Romania and will be one of the largest IPOs made globally during this period. It is a very important transaction for Romania, with significant implications, including the promotion to Emerging Market status by MSCI, and we strongly believe in the success of this listing.”

In the last 5 years, the capital market in Romania has outperformed compared to a number of representative indices after the companies in the BET-TR index had offered investors a growth rate above 100%, expressed in the single European currency. The positive evolution of the capital market in the first five months of 2023 comes after a year 2022 marked by volatility and uncertainties.

At the level of the Romanian capital market, new all-time highs were recorded last year in terms of the total traded value, average daily liquidity, and number of transactions. Thus, the Bucharest Stock Exchange reached a new record in 2022 in terms of the total value of transactions carried out on all markets with all types of financial instruments as the total transactions exceeded RON 24 billion, up by 11% compared to the level of 2021.

Also last year, the average daily trading liquidity for all types of financial instruments listed on the Regulated Market and the Multilateral Trading System increased by 11% and reached RON 95.6 million. Investors achieved a new record in 2022 in terms of the number of transactions in all types of financial instruments carried out in all markets: more than 1.67 million transactions. At the same time, international uncertainties led to market declines of 1.9% for the BET-TR index at the end of last year.

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