THREE WEIRD THINGSNow we have Romgaz as well, what do we do?

ADINA ARDELEANU (Translated by Cosmin Ghidoveanu)
Ziarul BURSA #English Section /

Now we have Romgaz as well, what do we do?

The Romanian equity saw its dream come true: trading of Romgaz shares, the largest gas producer in Romania will begin today.

The brokers' happiness should have reached its climax, especially when considering that the IPO is taking place even though the government doesn't seem to be a fan of the Bucharest Stock Exchange.

We can tell it is so by the fact that it chose to take Romgaz public in London as well, in the form of global depository receipts (GDRs), under the pretense that not enough money could be raised in Romania to make the IPO a success, only to then significantly lower its expectations, thus leaving a very strange impression when it comes to the statements made by the officials.

Moreover, PM Victor Ponta is in Great Britain today, to launch the trading of the GDRs, instead of participating in the BSE ceremony - another weird choice.

Also going to London is the delegated minister for energy, Constantin Niţă, whereas last night in Bucharest it was unknown who would represent the government at the launch of the trading of Romgaz shares.

Before even getting the chance to see what will happen to the shares of Romgaz on the BSE and with the GDRs in London, the delegated minister for Energy, Constantin Niţă, has openly expressed his preference for London.


He also announced that he wants to propose to the Government to have the IPOs of Hidroelectrica and Electrica follow the model of the one in Romgaz, with some of the stock traded on the BSE and the rest in the form of GDRs on the London Stock Exchange.

And this is said even though the small tier of Romgaz was oversubscribed 17 times and it could have on its own paid for the entire block of shares.

Weird, weird, weird!

Even though the authorities don't seem to pay much attention to the BSE, (the officials of the BSE did not participate in the conference which announced the results of the Romgaz IPO), they did carry out, after numerous postponements, the tasks agreed upon with the International Monetary Fund, and the Romanian Stock Exchange received more "merchandise" from the state, just like it asked.

It remains to be seen what the BSE will do with it and whether it will succeed in giving the Romanian stock market, which is more than doubtful, given the unpleasant past experiences.

As this autumn's IPOs were getting closer, brokers claimed that the weak performance of the stock market trading sessions were caused by the fact that investors were saving their money for the next IPO.

By that logic, Romgaz should be the spark of success for our stock market.

But what do we do, because for 2014, the Government has pledged to sell shares in Hidroelectrica, Electrica and CE Oltenia.

Do we wait until they and think more about this what they are done?

Eternally optimistic, the stock market players invariably answer that the stock market needs stocks to grow, especially from one year to the next. This year, the government launched the IPOs, but the growth is taking its time.


"The enthusiasm of investors could prove lower than in the case of Transelectrica"

"Even though theoretically, the price could rise 30-40%, in practice, the shares of Romgaz could very well stagnate near the opening price"

According to economic analyst Ionel Blănculescu, investors could prove less enthusiastic in the case of Romgaz than they were at the IPO of Transelectrica.

He claims that even though, theoretically, the stock could rise 30-40%, in practice, the shares of Romgaz could very well stagnate near the opening price.

He said: "On principle, when there is an oversubscription, buying pressure occurs, driving the price upwards. In theory, prices could jump 30-40%, but only in theory. In reality, the shares of Romgaz could very well hover near their opening price, because when they bought those shares, the investors set aside certain amounts. They failed to buy all the shares they wanted for that amount, and they are now trying again, with the same money. If the price goes up, the investors will not buy. Thus, we will see a shrinking bid and as a result, a drop of the price, which could stop at about 32 lei/share, even though theoretically, it could rise to about 40 lei".

Florin Pogonaru, the president of the Association of Romanian Businesspeople (AOAR), considers that the stock of Romgaz will rise after the listing. He also considers that the listing of the GDRs in London will bring us increased visibility among foreign investors.

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