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Romania needs Hidroelectrica to be privatized in order to reach more liquidity on the stock exchange to be added up to the MSCI emerging markets observation list, and than get the emerging market status, Ludwik Sobolewski, CEO of the Bucharest Stock Exchange, told energynomics.ro.
Romania is now under the frontier market status, which brings in virtually no or little foreign investments, as funds specialized into emerging investments simply are not allowed to invest here.
„We are now presenting to our colleagues form MSCI and FTSE our progress since 2013, especially because we want to improve the perception which them and other institutions have on the qualitative assessment of the market. We need still to improve conditions for the liquidity formation, in order to have a larger turnover- this quantitative indicator is indispensable, and is is on track. I think that we are solidifying position every week, and every month, but whether something is happening this year will see, now is premature…”, said Sobolewski.
„We will not be qualified directly as an emerging market, we would get on an observation list…Hidroelectrica would greatly help us, because we need to have at least three companies with a big value of the free float, with a decent liquidity and also a market cap, and Hidroelectrica is the obvious candidate of being among those three large companies”, he added.
„The MSCI conditions are cumulative, and reaching the threshold, which is very demanding, is really our challenge.” He also said that Fondul Proprietatea’s listing may not be included into the index, as funds are not allowed on the classification criteria list.
„We have a clear leadership, Petrom, BRD, Banca Transilvania, Romgaz and maybe Electrica will also have a chance to be added to the list”, Sobolewski said.
Romania’s frontier market status saw the level of foreign direct investments (FDI) decreasing steeply during the economic crisis, from a 9.5 billion euro record – high in 2008 to just about 2.1 billion euro in 2012.
However, climbing to the emerging market status may lure in large sovereign funds and more FDI, as well as speculative investments, analysts such as Mark Mobius, executive chairman of Templeton Emerging Markets Group and an “emerging markets guru” previously said.
