ANNIVERSARY EDITION / AT 25The BSE steps into a new stage of development

ANDREI IACOMI (TRANSLATED BY COSMIN GHIDOVEANU)
English Section /

The BSE steps into a new stage of development

The Bucharest Stock Exchange is celebrating today 25 years since the first trades conducted through its platform, after a period of almost 50 years where no stock exchanges existed in Romania, and the landscape has fundamentally changed.

On November 20, 1995, 905 shares were traded, belonging to a number of six listed companies. After a quarter of a century, BVB has over 350 listed companies and an average of over 42 million shares are traded daily.

At the end of 1995, which had only five trading sessions, the median daily turnover was 50,000 lei, and two years later, together with the Rasdaq, it rose to 2.08 million lei. Today, the average daily turnover on the Bucharest Stock Exchange amounts to 64.28 million lei.

It is an obvious progress, and our capital market is in a totally different point compared to its early years, a fact highlighted by BSE CEO Adrian Tănase.

In addition to the increase in the size of listed companies and in turnover, a fundamental change has occurred in the structure of investors. Unlike the beginnings of the stock market, when retail investors predominated in an overwhelming proportion, and most of them did not even know that, today, the market is dominated by institutional investors, investment funds and pension funds, as in the case of developed stock exchanges.

It was a slow evolution, and probably could not have been much different, given that Romania itself has gone through a quarter of a century of searching and learning what the market economy means, according to Nicolae Gherguş, one of the oldest brokers in our country.

Along the way, the Bucharest Stock Exchange absorbed Rasdaq, which appeared with mass privatization, with a name adapted from the famous American technology exchange, and later Sibex, the pioneer of derivative financial instruments in Romania.

But initiation is only knowing and becoming familiar with the basic elements, and introduction, which the subsequent solid growth needs to rely on, and taking into account the relatively low level of development of the Romanian stock exchange and the higher level it has recently been promoted to, there is real potential for progress.

Now, the BSE, together with its stock market and energy market partners, is building its own infrastructure for the relaunch of the derivatives market, with the Central Counterparty being the largest investment made by the Bucharest Stock Exchange in a single project.

The 25 years of activity of BVB may have represented an initiation stage, during which time the market was structured and mechanisms were created on a par with those of the important stock exchanges, according to Alin Brendea, who runs the Prime Transaction brokerage firm.

But the initiation is only the knowledge and familiarization with the basic elements, an introduction, on which to support the subsequent solid growth. And taking into account the still relatively low stage of development of our capital market and the new status we have just acquired, there are real possibilities for evolution.

Investors are the core element which any stock market revolves around, the ones who put their money in the business they think create goods or provide sought-after services, useful to society, and will thus make a profit.

The coming years must bring to the forefront the most important players of the stock market, i.e. retail investors, that is the message sent by Lucian Isac, who leads brokerage firm Estinvest.

During the time we are going through, marked by the crisis caused by the quarantine, has led tto changes that are probably definitive on the way we work. Interaction has been reduced to a minimum, businesses have been forced to go digital and things will not be the way they were before. This is obviously an opportunity for the stock market, and the legislative changes which allow the digitalization of the relationship with investors are a major boon for the growth of the stock market, says Virgil Zahan of Goldring, who was behind the largest number of listings on the BSE in the last four or five years.

And the period we are just going through, marked by the crisis caused by the Covid-19 pandemic, has led to probably definitive changes in the way we operate. The interaction has been reduced to a minimum, business has been digitally forced and the situation will not return to normal. It is obviously an opportunity for the capital market, and the legislative changes that allow the digitalization of the relationship with investors are a big plus for the development of the stock market, says Virgil Zahan from Goldring, who has been behind most listings from BVB in recent four or five years.

The crisis has also brought the prospect of a long period of very low interest rates, in which capital, in search of higher returns, is moving towards listed stocks and bonds, which offer the potential for higher gains. And in that regard, the Bucharest Stock Exchange is in the advanced stages of the Champions League.

Since 2009, the diversified investment in the largest and most liquid companies listed on BVB has generated an average annual return of 15%, and last year, our stock exchange was the third best-performing in the world - the BET-TR index gained 47%, according to the information provided by brokerage firm Tradeville.

The quarter-century anniversary finds the Bucharest Stock Exchange having newly entered the emerging markets league, the obvious recognition of the progress made during all this time.

Happy birthday, Bucharest Stock Exchange!

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