ZF English

BSE loses 1bn euros in one day, hit by corrections on foreign markets

26.07.2007, 18:40 10

The Stock Exchange witnessed its first severe correction yesterday, after a series of all time highs over the past month, losing a little more than 1 billion euros of its capitalisation. This decline practically cancelled out the increase at the beginning of the week.
The SIFs (financial investment companies) led the way to the decline, with the BET-FI index losing 4.2%, the sharpest daily fall since March, while the BET index, which gauges the performance of the top 10 companies on the Bucharest Stock Exchange, fell 3.4%.
The biggest losers were SIF Oltenia (SIF5) and SIF Moldova (SIF2), which fell 5% each, having witnessed a large volume of transactions. Out of the major companies, Oltchim Ramnicu Valcea (OLT) lost 12%, while Petrom Bucuresti (SNP) went down by 3.3%.
Petrom was the main loser in terms of value, with a 360 million-euro decline in capitalisation, while Oltchim shed 150 million euros from its capitalisation and SIF Oltenia 50 million euros.
RASDAQ was not free of corrections, either. The capitalisation of this market dropped by 350 million euros yesterday.
The main reason for the correction yesterday was the decline on the American and European capital markets over concern about the performance of the American economy.
Almost every European market opened with significant declines yesterday, after the indices of the American markets had lost 1.5 to 2% in the Tuesday session.
"Today's (yesterday's i.e.) correction is the effect of the decline on the foreign markets. Still, the foreign context is only a motivation, considering a large number of analysts had said a correction was imminent, which is actually natural, after the substantial rises lately," Rares Nilas, BT Securities' general manager said.
The major fluctuations on the foreign markets have been making an increasingly greater impact on the market in Bucharest over the last few months. The BSE increase overlapped with an upward trend of all the international markets, with many Western markets reaching all time highs in this period.
The higher volatility of the Romanian market, however, makes the impact of the fluctuations on the foreign market on the trend of the Romanian shares even stronger. This is why the indices of the market in Bucharest lost 3-4% yesterday, while most European markets were seeing 1-2% decline. The European markets started to rebound in the second half of the day, at which time the Bucharest Stock Exchange had already been closed.
A similar correction, yet more serious, occurred in February, when all the international markets witnessed significant declines after the market in China plunged.
Brokers say the trend of the market over the coming period is very much up to what happens on the foreign markets. In case all the international stock markets resume growth, the market in Bucharest will do the same. If not, then we can expect corrections to continue.

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