The year ending in a few days probably marks the best one in the 28-year history of the Bucharest Stock Exchange (BSE). The main event of the year on the capital market was the listing of Hidroelectrica, the highest initial public offering (IPO) in Europe and the third-highest worldwide.
With nearly EUR 2 billion attracted by the Hidroelectrica listing, BSE capitalization exceeded the EUR 40 billion threshold and made an important step towards obtaining the emerging market status from Morgan Stanley Capital International (MSCI). The BSE subsequently becomes the third largest market in Central and Eastern Europe. Trading entry occurred on July 12.
The price per share set in the IPO was RON 104, which led to the capitalization of Hidroelectrica at RON 46.77 billion.
Hidroelectrica brings Bucharest Stock Exchange closer to emerging market status
The listing was followed by the historical record of the BET index that managed to break the 15,000 points bar for the first time, driven by shares such as OMV Petrom, Banca Transilvania or Transport Trade Service, that generated significant yields.
Compared to the entire market value of companies listed on the BSE, Hidroelectrica represents approximately 22% of the total capitalization of companies listed on the capital market in Romania, which reached RON 211.77 billion (EUR 42.7 billion) at the end of H1 of this year.
However, despite the visibility of the BSE brought on by the listing of Hidroelectrica, there is still progress to be made in order to enter the emerging markets category. The liquidity of the local capital market must increase in order to meet an important standard.
2023 came with several records
Another record is the capitalization increase of all companies listed on the BSE by 43%. Moreover, the market value of all companies listed has doubled in the last six years, as pointed out by the BSE President of the Board of Directors, Radu Hanga.
In terms of the main market, BET-NG, which includes energy and utilities companies, registered the most significant increase among BSE indices, of 4.7% in November alone.
The BSE also registered an excellent performance in terms of yields for investors. Many of the stocks on the main market posted in 2023 earnings not seen in years, or reached all-time highs in the last quarter of the year.
Since the beginning of the year, the capital market in Romania has seen double-digit increases in all BSE indices, with only two trading days left for 2023. The BET index, which consists of the 20 most liquid companies listed on the RM, went up 31%, the BET-TR, which includes dividends as well, increased by over 39%.
It must be stressed that approximately 40% of the activity on the Bucharest Stock Exchange (BSE) primary market was represented by government bonds issued by the Ministry of Finances, as stated in October by Bucharest Stock Exchange (BSE) president, Radu Hanga. According to the Ministry of Finances, the program Fidelis registered indisputable success in 2023: over RON 9.38 billion from 68,863 subscription orders.
Energy companies boosted the stock market
This year’s stock market stars were energy and utilities companies. The BET-NG index, describing their quotation progress, rose by the same value as the main BET index: 31.3%. The vast majority of energy companies recorded double-digit increases:
- Hidroelectrica: 13.65%
- Transelectrica: 26.6%
- OMV Petrom: 26.3%
- Romgaz: 23.14%
- Nuclearelectrica: 10%
These very good results are undoubtedly owed to other energy premieres this year, besides the Hidroelectrica listing. Consequently, companies OMV Petrom and Romgaz announced the start of the investment for the development of the Neptun Deep perimeter in the Black Sea, with a commissioning target for 2027, following a EUR 4 billion investment.
Another major project developed by Transgaz is the Tuzla – Podișor pipeline, intended to carry the gas from the Neptun Deep perimeter.
The Tuzla – Podișor gas pipeline project stipulates the construction of a 308.3 km natural gas transport pipeline, providing the connection between natural gas resources exploited in the Neptun Deep perimeter and the BRUA gas pipeline.
Transgaz also took over the gas distribution network in the Republic of Moldova from Gazprom, becoming the countrywide operator of the national natural gas transportation system in the Republic of Moldova, through the company Vestmoldtransgaz.
Banks were among investors’ favorites
Financial institutions stocks were boosted by the interest rates increase.
Banca Transilvania shares’ price ends the year 30% over its 2022 closing price, making Banca Transilvania SA the holder of the best stocks in the banking industry on the BSE, worth watching in 2024 as well.
BRD Groupe Societe Generale shares performed very well this year as well, with a 25.5% increase, based on the good profit obtained.
But among the best-performing shares of 2023 are actually those of the Bucharest Stock Exchange, which rose by 42.5%, precisely due to nearing the moment of its inclusion in the emerging markets category.
Defense industry
The investors’ interest in companies connected with the field of defense should also be noted, caused by an increase in the budget allocated to this sector. Moreover, the shares of such companies increased globally after the outbreak of wars in the Ukraine and the Middle East.
Turbomecanica shares went up 38%, IAR Brașov rose by 34% and those of Aerostar Bacău increased by 12.6%, due to larger orders from the defense industry.
The biggest hikes
The biggest hikes of the top 20 most traded shares on the BSE were registered by transport company, TTS – Transport Trade Services, whose shares rose by 55.6% since the beginning of the year, followed by those of tourism company Turism, Hoteluri, Marea Neagră, that rose by 51,7%.
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