Shares in the financial investment companies (SIFs) yesterday surged for the third day in a row, following talks on dropping the 0.1% stake cap stipulated in their statutes. The SIF shares rose 6% on the average yesterday, driving their market value up to nearly one billion euros. The SIFs this week exceeded the net asset value few people would have seen them overshoot a few months ago for the first time since their Stock Exchange floatation. SIF shares have been the most profitable investment on the Bucharest Stock Exchange since the beginning of this year, yielding over 57% against an average market growth of 35%.
Shares in the five SIFs went out of synch with the overall market trend early this week after comments made on the market criticising the provisions that impose a 0.1% cap on interests in SIFs included in their statute.
The chairman of Senate Budget-Finance Committee, Varujan Vosganian, said earlier this week that the introduction of the stake cap in SIF statutes was a mistake that granted excessive powers to the SIF managers.
The National Securities Commission is reportedly working on a draft guideline that will clarify how the SIFs will modify their statutes, with one committee member proposing that the stake cap either be dropped or modified.
The talks on the 0.1% level a shareholder may not exceed in any of the SIFs have been a constant feature on the capital market for years, with suggestions made at one time to drop this cap by using the law.
Just like several months ago, when the SIFs were trading at half their current value, brokers' opinions on the growth potential of their shares still differ.
"I don't think SIFs are likely to increase that much. The SIFs will probably go through the same thing as Petrom and BRD in the last few days, whose prices have stagnated," said Grigore Chis, SSIF Broker's trading director. He believes prices of SIFs were recently driven up by speculators.
"Given that, with a 0.1% stake cap, every investor targets the net asset value, if raising the stake cap to 1% is approved, we can expect price targets to be double the net asset value," said Valentin Ionescu, head of operations at Euro Invest Vision brokerage firm.
SIFs calculate their net asset value using a methodology imposed by CNVM and criticised by many brokers for failing to reflect the real value of the portfolios. The SIFs' most important interest - 6% each in Banca Comerciala Romana (Romanian Commercial Bank) - is appraised at the accounting value of the shares as far as SIFs portfolios are concerned, while the banks listed on the stock exchange are evaluated at several times higher than the accounting value.
Besides the controversies about the stake cap, some of the reasons why SIFs have increased include the fact that four of them - Banat-Crisana, Moldova, Transilvania and Muntenia - will elect their Boards of Directors this spring. Some investors on the market are buying at the last minute to secure more voting rights. vlad.nicolaescu@zf.ro
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