The executive, head of strategy at Romania's state-controlled power-grid operator Transelectrica, was sitting in the lobby of New York's
"The Bucharest Stock Exchange is very small, but in terms of returns you can make much higher margins than in developed markets," he said. As a result, "the visibility of
Purdila's own company is a case in point. Transelectrica, which has a market capitalization of about
Small wonder, then, that Purdila brushed aside questions about the country's failure to implement important reforms or the deepening political crisis caused by tussles between members of the government.
"In Romania, the market is less and less dependent on the political situation, " Purdila said. "This is not to say that there aren't certain tensions, that we're not preoccupied. Electricity, however, is not political."
Dragos Simion, vice president of Romanian technology retailer Flamingo International, agreed: "The issue with politics is something that creates noise." But now that
Toughing it out
With a population of 22 million,
The two countries are eligible for large amounts of E.U. structural funds, which could significantly improve development, especially in infrastructure.
That's not the only benefit.
"As new entrants into the E.U., both
That was certainly the case when
Fast-growing sectors like information technology, real estate, financial services and tourism offer abundant investment options in
"There are many opportunities and not enough capital to fund them," said
Romanian economic growth is robust, as well. The economy expanded by 7.7% last year. The Economist Intelligence Unit is expecting GDP growth of 6.4% in 2007.
The level of convergence between
However, "strong economic growth, discounted valuations and rapidly developing markets [mean] the two countries provide some good investment opportunities," he said.
"Apart from liquidity, the level of investor communication and overall corporate governance could improve, but with the recent E.U. accession we are optimistic about the future of these markets."
Low liquidity, particularly in
Cloudy short-term outlook
Still, even with their economies are on a growth path, the short-term outlook for
"Ratings of the two E.U. newcomers,
The outlook is most negative for
Reforms implemented in the late 1990s succeeded in stabilizing the currency, the lev. As a result, the country's ratings have dramatically improved over the last decade. The key fiscal risk to the country right now is the current-account deficit.
The governing coalition is a hodgepodge of parties led by a socialist prime minister, but it has managed to function, unlike the government in
The feud between Romanian President Traian Basescu and Prime Minister Calin Tariceanu, who have been sharing power in the coalition government, has slowed down the fight against corruption as well as much-needed reforms in the public- administration and justice systems.
"There are a tremendous number of reforms that need to be implemented," said