Wednesday, February 28, 2007

Foreigners massively invest in Romania's stock market

Foreign investment in the Bucharest Stock Exchange (BVB) in January almost equaled the 2006 full-year investments, the national Rompres news agency reported on Tuesday.

Despite the rather meager BVB offer in January, capital inflows exceeded outflows by 57.1 million euros (73.2 million U.S. dollars), Rompres said, quoting data of the National Securities Commission (CNVM).

Net placements were just 2.4 million euros (3 million dollars) less than the aggregate figure reported in 2006, or threefold the amount posted in December 2006 and over four times higher than that reported in January 2006.

Local analysts expect the massive inflows of foreign capital to make share prices prohibitive for small Romanian investors.

Since the beginning of this year, the BVB indices have hit several record-highs.

The number of foreign broker companies operating in the Romanian market increased to 30. Many of them are registered in Britain, including famous names like Citgroup Global Markets, J.P. Morgan Lehman Brothers, ODL Securities, First Avenue Partners and Bear Stearns Asset Management.

The foreign brokers will bring their clients to Bucharest and render the market even more dynamic.

Experts warn that the entry of foreign investors will increase price volatility. Foreigners are more prone to marking profits by rapidly selling stocks, causing quotations to fall to levels where re-acquisition is advantageous. Small and inexperienced investors are expected to need experts' advice more than ever.

Source: Xinhua

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