BURSA 22.01.2018

Călin Rechea (translated by Cosmin Ghidoveanu)
 
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Călin Rechea (translated by Cosmin Ghidoveanu)      The issue of the funding of the budget deficit will become acute in 2018, as the government authorities show us that they haven't learned anything from last year's experience.
     Aside from a series of unrealistic hypotheses used in the construction of the budget, such as the ones concerning the exchange rate or the rate of inflation, the country's financial position will be heavily affected by the increase in interest rates, especially since a similar trend is taking place internationally.
     The first warning signs have appeared since back in the last quarter of 2017, when 13 auctions for the sale of government bonds failed, amid the refusal of the government to accept the coupons the banks were asking for. 2017 saw 16 failed auctions, a new record, significantly higher than the previous record, of 10 failed auctions, which was seen in 2010, amid an economic recession.
     According to prospectuses from Q4 2017, the government has tried to borrow from the domestic market 7.4 billion through government bonds in lei, but has only succeeded in raising 2.28 billion, amid the constant failures of short term issues (author's note: securities with a 6 and 12 month maturity).
     The last success was seen in August 2017, when the government raised 800 million lei for a period of 12 months for a return of 0.79%, while the ROBOR interest rate with a similar maturity was 1.23%. The quote on the last trading day was 2.32% for the 12-month ROBOR.
     The massive hike of the borrowing costs in 2017, both on the government market as well on the interbank market reflected the brutal drop of confidence in the country's outlook under the current government.
     Is a new doubling of the interest rate in 2018 possible again, according to some forecasts? Of course, especially amid a new accelerated increase in the second half of the year, once it becomes increasingly obvious that the current economic "performance" is not sustainable. When investors estimate that the credit and inflation risk will increase, then they are going to ask for higher yields to compensate for them.
     During the first term of president Bill Clinton, the return of 10-year government bonds increased from approximately 5.2% to 8%, between October 1993 and November 1994, amid concern among investors concerning the increase in federal spending. In the next 4 years, the returns dropped to about 4% following the measures taken by the Clinton administration and Congress to reduce the budget deficit.
     This was the context in which James Carville, political advisor to the president, said that "I was thinking once that if reincarnation existed, I would like to return as president, pope or a famous baseball player. I've changed my mind: I'd like to return as a bond market, because that way you can intimidate everybody". Soon our authorities will feel this intimidation.
     Unfortunately, the rise in the interest rates will have a significantly negative impact on the private sector as well, amid the major discrepancy between the economic growth and the rise of debts in the last decade.
     In this context, the government published the Indicative program for government bonds issues pertaining to 2018 with amounts close to those of the previous year, even though its chances of being carried out are almost nil.
     Why? Because in 2017 only 39.83 billion lei were raised out of an announced amount of bonds of 47.245 billion lei, as only 30.2% of the amounts proposed in Q4 2017 were raised (author's note: 2.509 billion lei out of 8.285 billion planned).
     In 2018 the government plans to borrow approximately 74 billion lei, amid a needed amount for refinancing the public debt of approximately 47 billion.
     The novelty in the issue program for 2018 is represented by "the introduction of a new savings instrument for the population" as part of the TEZAUR program. Citizens will have the opportunity to lend to the state by buying bonds with a par value of 1 leu and maturities ranging between 1 and 10 years directly from the operative units of the Treasury of the State.
     The interest rates which will be paid, which will probably be fixed, have not yet been announced, but any rate of the coupon below 5% for bonds with a maturity below 5 years and below 10% for those with a maturity of less than 10 years show that the bonds offered to the population are in fact "certificates of guaranteed confiscation".
     Why? Because the bonds bought out as part pf the TEZAUR program may not be transferred, may not be traded and may not be bought in advance. If the government had wanted to provide citizens with a true savings alternative instead of a concealed theft, then the nominal value of the shares would have been adjusted with the inflation rate. An "investor" in these bonds will be captive and will watch helplessly how their buying power is "melting".
     Even if the issues of the TEZAUR program are "successful", amid the low level of financial education among the population, the amounts raised will be too small to compensate for the banks' "reluctance".
     Not even the hike of the indebtedness platform for bonds issued on foreign markets, as part of the MTN (Medium Term Notes), will not help much.
     According to data from the Luxemburg stock exchange, as part of the current ceiling of 20 billion Euros funding was raised through 21 bonds issues, and the new ceiling will be approximately 27 billion Euros, as the government intends to borrow 8 billion Euros in the coming 2 years.
     Unfortunately, the extremely favorable terms for financing that have been around over the last few years will soon become history. Moreover, the amounts raised will be placed with the NBR, which will "offer" lei in exchange for them, usually through money issuing.
     Thus the circumstances will be created for new pressures for the depreciation of the leu, accompanied by new interest rate hikes. If the amounts raised in Euros will be converted in lei raised from the market, the effect will be the reintroduction of liquidity, which will also be accompanied by the hike of the interest rates.
     We have come here to this point because we have not learned the lessons of the crisis from the end of the last decade and we have continued with the debt consumption, amid aberrant policies of the state and amid an extremely weak private sector.
     Austrian economist Fritz Machlup wrote, in 1935, about the consequences of capital consumption in Austria: "Austria was successful in passing policies which are popular all over the world. Austria has the most impressive accomplishments in five areas: it has raised public spending, it has raised salaries, it has raised welfare, it has increased bank credit and has increased consumption. After all these achievements, Austria is on the brink of ruin" (author's note: "The Consumption of Capital in Austria", Review of Economic Statistics, 1935).
     But how could we learn a lesson that is 80 years old, when we couldn't even learn the lesson of the crisis that happened ten years ago?
     In 1927, Felix Somary, Austrian economist and banker with a particular influence on the economic and financial policies of the first half of the past century, was asked by John Maynard Keynes what advice he had for his clients. "To protect themselves as much as possible against the future crisis and to avoid the markets", Somary answered, he reminisces in his autobiography, translated in English with the title "the Raven in Zurich".
     "There won't be any more crashes in our time", Keynes contradicted him, but he nevertheless asked him what he thought might cause such a development. "The collapse will come as a result of the gap between appearance and reality", came the reply of the Austrian economist, who also reminds that the famous English economist, "has expressed his contempt for the economy as a science and for economists and for economists, without excluding himself, but he was very proud of his talents as a speculator".
     Almost one century after the forecast of Felix Somary, the gaps between appearance and reality, on a global level, seem to be greater than ever, and in Romania they are just as high as they were in the period that preceded the economic collapse of 2009.
     "If there is nothing that prevents the leap into the abyss of our contemporaries, it needs to be at least emphasized who is responsible for the coming catastrophe", Somary further writes in his autobiography.
     It would seem we are sentenced to repeat the lesson of the crisis until we learn at least its fundamental points. 
 

 
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Aceeasi sectiune (English Section)
BECAUSE AN AGREEMENT ON THE PRICE COULDN'T BE REACHED,
Miscellanea
CAUZĂ CARITABILĂ:
     Sara Elena Gabriela Dragan, o fetiță în vârstă de 4 luni și jumătate, din localitatea Voluntari, județul Ilfov, a fost diagnosticată cu Renitoblastom Bilateral (cancer la ochi), o boală foarte gravă, care avansează destul de repede.  click să citești tot articolul
Bănci-Asigurări
     * Dolarul a coborât cu 4,17 bani în fața monedei naționale.
     * Francul s-a depreciat la 4,0809 lei
     Banca Națională a României (BNR) a anunțat, astăzi, un curs de referință de 4,6434 lei pentru moneda europeană, în depreciere cu 0,49 bani, comparativ cu ședința anterioară, când euro a fost cotat la 4,6483 lei.  click să citești tot articolul
Bănci-Asigurări
     Indicele ROBOR la 3 luni stagnează la 3,27%, valoarea înregistrată și în sedința precedentă, potrivit datelor publicate de Banca Națională a României (BNR).  click să citești tot articolul
Piaţa de Capital
     Indicii de pe Bursa de Valori București (BVB) au deschis în depreciere ședința de tranzacționare de astăzi.  click să citești tot articolul
Calendarul BURSA 2018
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Cotații Internaționale

Prognoza Meteo
Vezi harta temperaturilor
harta temperaturilor
     21.08.2018 
     Prognoza pentru România
     Vremea va fi în general frumoasă și călduroasă în cea mai mare parte a țării, iar indicele de confort termic, temperatură-umezeală (ITU), va atinge și depăși ușor pragul critic de 80 de unități, local în Câmpia de Vest și pe suprafețe mici în Câmpia Română. Cerul va fi variabil, însă după-amiaza și seara gradul de instabilitate atmosferică va fi în creștere și se va manifesta prin înnorări accentuate, averse, descărcări electrice și intensificări de scurtă durată ale vântului, local în zona de deal și munte, pe arii restrânse în sud-sud-vest și cu totul izolat în rest. Punctiform se pot înregistra cantități de apă mai însemnate. Temperaturile maxime vor fi cuprinse între 27 și 35 de grade, iar cele minime între 13 și 23 de grade. Dimineața și noaptea, în depresiunile din estul Transilvaniei, vor fi condiții de ceață.
     Prognoza pentru București
     Vremea va fi în general frumoasă și călduroasă, iar indicele de confort termic, temperatură umezeală (ITU), se va apropia și posibil va atinge pragul critic de 80 de unități. Cerul va fi variabil, cu unele înnorări după-amiaza și seara, când vor crește șansele pentru ploi de scurtă durată și descărcări electrice. Vântul va sufla slab și moderat. Temperatura maximă va fi în jur de 33 de grade, iar cea minimă de 18...20 de grade.
      
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English Section
20.08.2018
THE NATIONAL MINERAL RESOURCES AGENCY, IN A NOTIFICATION TO THE PRIME-MINISTER:
     The Romanian government has lost over 8 billion lei, between 2006-2018, following the failure to update the royalties paid by the oil and gas companies, says Gigi Dragomir, the president of the National Mineral Resources Agency (ANRM), in a report sent to the prime-minister.  click here to read the entire article
15.08.2018
      * (Interview with Radu Grațian Ghețea, President - CEO of CEC Bank)
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     Reporter: Lately, there have been opinions from some experts who are saying that there is a wave of non-performing loans of the ones taken out by the First Home Program. What is your comment on these statements?  click here to read the entire article
08.08.2018
     * (Interview with Laszlo Diosi, OTP Bank CEO)
     Reporter: How would you describe the banking market, at the present time?
     Laszlo Diosi: Even though there are plenty of challenges, there are also many opportunities for the Romanian banking system. The lessons of the financial-economic crisis have resulted in a better regulated framework, stable, transparent and predictable. The guiding line of the policies developed by the authorities that are qualified, but in particular by those with a regulatory and oversight role has been characterized by a balance between profitability and systemic safety.
     But there is no shortage of challenges. We are talking here about challenges which concern the digitalization of the banking system and the national and international legislation. The entire system needs to align with complex and sometimes confused regulations.
     Recorded by Emilia Olescu  click here to read the entire article
31.07.2018
     * (Interview with Dan Paul, the president of the Association of Brokers)
     The management of the Bucharest Stock Exchange (BVB) needs to find out from brokers whether Romania truly needs a derivatives market, says Dan Paul, the president of the Association of Brokers, who was kind enough to grant BURSA an interview.  click here to read the entire article
27.07.2018
THE DĂNCILĂ GOVERNMENT AFTER SIX MONTHS
     Now we know why prime-minister Dăncilă was in a hurry to announce the activity report for the first six months at the helm of the Romanian government: the nice tale of the hike of pensions and salaries wasn't supposed to be overshadowed by the evolution of budget expenses, whose increase has led the deficit of the consolidated general budget to 1.61% of the GDP, from 0.88% after the first five months of the year.  click here to read the entire article
23.07.2018
BECAUSE AN AGREEMENT ON THE PRICE COULDN'T BE REACHED,
     The public offer started by Vimetco and Conef for a stake of at most 53.77% of the shares of Alro Slatina (Alro) has been unsuccessful, as the issuer announced that due to the unfavorable market conditions, the shareholders, company and underwriters couldn't agree on a price for the volume of 383.79 million shares put up for sale.  click here to read the entire article
23.07.2018
ECONOMIC ANALYST AURELIAN DOCHIA PREDICTS:
     * According to Eurostat, Romania has the biggest governmental deficit in the EU
     The hike of some taxes, in the near future, is unavoidable, according to economic analyst Aurelian Dochia.
     His statement comes as, in the first quarter, the government's deficit has seen an increase over the last quarter of 2017, according to data by the European Statistics Office (Eurostat).  click here to read the entire article
13.07.2018
Russia World Cup
     The final tournament of the World Football Cup will end with a gala representation, the duel between Croatia and France. France, the with the most expensive players in the tournament, has met the expectations, Croatia is the biggest surprise the of the competition.  click here to read the entire article
09.07.2018
FOOTBALL AND MONEY
     Cristiano Ronaldo (33 years old) had several hits over the last few days, even though in the final tournament of the World Championship he failed to exceed expectations, as Portugal was eliminated in the round of eight.  click here to read the entire article
05.07.2018
     The world is intensely preparing for a water crisis, the most important resource for human life. The signs, on a continental and global level, that there is a water problem are increasingly clear.  click here to read the entire article
02.07.2018
     The Bursa Construcțiilor magazine, published by the BURSA press group, has taken the first step in the third decade of existence and has awarded, in this year's Gala, no fewer than 20 awards of excellence, to some of the most important associations in the sector, as well as to companies that have stood out through their activity.  click here to read the entire article
27.06.2018
A VOTE FOR AN UNFORGETTABLE SUMMER
     In the plenum joint meeting of the Chamber of Deputies and the Senate, which will be held today starting at 14:00, will be debated and put up for vote the vote of no-confidence against the government submitted by 152 members of the opposition.
     The document which incriminates the failures of the Dăncilă government has been read in the Parliament on Monday, June 25th.  click here to read the entire article
25.06.2018
     Even without the court ruling rendered in first instance by the High Court of Cassation and Justice in the lawsuit of the fictitious hiring at the Child Protection Department of Teleorman the focus on getting all the institutional levers under the - informal, but all the more important - authority of Liviu Dragnea. But, after his conviction on June 21, this trend will speed up. But only through this kind of concentration of power can the president of the Chamber of Deputies hope to change not only the balance of power - which is already favorable to him, even though nothing is final in politics -, but the legislation based on which he has been sentenced, so that he gets exonerated of any legal responsibility. Or, when the powers of the state are concentrated in the hands of one man, democracy, even though it may be only a façade, moves aside to be replaced by autocracy. And in Romania, the temptation of autocracy, hidden under the veil of illiberalism, is more powerful than it has ever been, after the fall of communism. Could this be just an accident owed to the meteoric apparition of Liviu Dragnea?  click here to read the entire article
19.06.2018
     The Romanian Constitution:
     Art. 80 - The role of the president
     (1) The Romanian president represents the Romanian government and is the guarantor of national independence, unity and territorial integrity.
     (2) The Romanian president must watch for the compliance with the Constitution and the good functioning of the public authorities. For that purpose, the president serves as a mediating entity between the powers of the state, as well as between the state and society.  click here to read the entire article
12.06.2018
     The reunion scheduled today between Donald Trump and Kim Jong-un is taking place in Singapore due to the relative neutrality and the security this city-state provides. Singapore is one of the few countries that still hosts a North-Korean embassy, and many of the deals of the Kim regime were conducted here, according to the foreign press.  click here to read the entire article
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