HOW LONG WILL THE MIRACLE LAST?Brokers expect a rush on the BSE, after Romgaz

OCTAVIAN RADU (Translated by Cosmin Ghidoveanu)
Ziarul BURSA #English Section / 5 noiembrie 2013

The Proprietatea Fund, new all-time high

Shares of "Nuclearelectrica" rise 5.1%

The stock market showed signs of liveliness, with rising volumes and quotations, yesterday, in its first session after the results of the Romgaz IPO were announced.

All the indexes of the stock market rose yesterday, amid higher than usual volume, of 54.6 million lei (12.3 million Euros), 127% higher over the previous session.

Brokers say that this increase in volume is due to the funds set aside for the Romgaz IPO being returned to investors, which according to them are going back into stocks.

The allocation index on the small tier of the Romgaz IPO is 0.7519, and according to the prospectus, the oversubscribed amounts will be returned to investors within five working days from the last day of the IPO, which was last Thursday.

According to Mihai Mureşian, head of trading "Intercapital Invest", even if the Romgaz investors have not yet received back the oversubscribed amounts, investors have already begun rebuilding their portfolios, because trades are usually settled after three days, in other words on the day when the return of the oversubscribed money will be confirmed.

Nicu Moroianu, executive director of BT Securities, ascribes the increase in volume to the fact that autumn stock buying was postponed due to the two awaited offers, Nuclearelectrica and Romgaz.

He also considers that after the allocation of the shares in the Romgaz IPO, investors know what kind of shares they have available, so that they can buy stocks while the prices are still low.

Another reason behind the increase in liquidity, according to Mr. Moroianu, is the fact that companies are publishing their nine-month earnings, which can influence the decisions of the investors.

Considering the forecasted economic growth in Romania, the executive director of BT Securities advises investors to buy stocks, because in the event of economic growth, their prices will rise. As for bank deposits, Nicu Moroianu considers that under the current circumstances, they are "totally unviable".

Marcel Murgoci, the operations director of "Estinvest", considers that the high liquidity seen in yesterday's trading session is the result of the money which became available after the allocation of Romgaz shares, amounts which entered or are going to enter the market. He expects we will see high volumes in the next trading sessions as well.

Shares of Nuclearelectrica, up 5.1%

Shares of "Nuclearelectrica" (SNN) yesterday rose 5.1%, to 11.53 lei/share, on their first trading day on the BSE.

Mr. Murgoci considers that the price is "fair", close to the one in the IPO (11.2 lei/share).

According to the operations director of Estinvest, the price of the Nuclearelectrica allocation rights had seen quite a fall, because investors did not expect the Romgaz IPO to take place so quickly, and some of the shareholders of SNN had sold some of their shares to participate in the IPO of Romgaz.

Mihai Mureşian ascribes the rise of the shares of SNN to the overall market enthusiasm and to the fact that the company has not been traded for a few sessions, as its trading was halted to allow the conversion of the allocation rights into shares.

Mr. Mureşian is optimistic when it comes to the future evolution of the market, and he expects that, until the end of the year, at least, the market will rise.

Nicu Moroianu ascribes the rise of SNN to the fact that European companies in the same line of business have seen their stocks rise during the time that the company was suspended from trading.

The Proprietatea Fund has followed the overall market trend. The stock reached a historic high, of 0.805 lei/unit, up 0.69% over the previous session.

The highest volume was seen on the shares of the Proprietatea Fund (FP) - 24.2 million lei, Petrom (SNP) - 4.7 million lei, SIF5 Oltenia - 4.3 million lei, Transgaz (TGN) - 4.3 million lei and Nuclearelectrica (SNN) -3.4 million lei.

Sobolewski: The Exchange should try to persuade the buyers of Romgaz GDRs to convert them into shares

The Exchange should try to persuade the investors that have acquired GDRs in the Romgaz IPO to convert them into shares which they would then be able to trade on the Bucharest Stock Exchange, BSE CEO Ludwik Sobolewski says.

"Our ambition should be to convince those who asked to buy GDRs or were persuaded to do so to convert them into shares. We would like to see more shares traded on the local market than the current number resulting from the IPO. In order to do so, we need to have interesting assets on the local market, not just Romgaz, but other companies as well", said Sobolewski, quoted by Mediafax.

Investors bought 36% of the shares of Romgaz sold in the IPO in the form of Global Depository Receipts (GDRs), while the remaining 64% were acquired directly, in the form of shares tradable on the Bucharest Stock Exchange.

Romgaz sold 15% of its shares in the IPO, for 1.7 billion lei (534 million dollars or 391 million Euros).

The tier for small investors was oversubscribed 17.7 times, and the highest order on that segment was 249 million lei (almost 90% of the tier).

The CEO of the BSE said: "The response from individual investors was huge, it was amazing in terms of the amounts, but not in terms of the number of investors that participated in the IPO. We are pleased that this number ranged in the thousands, but I would have expected more, considering the reputation and the size of the company and how much this IPO was publicized. We should also work on some improvements of the IPO process, when it is dedicated to individual investors, to get them involved in greater numbers. We will have concrete proposals prepared on how to reach that goal".

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