Market regulators decided to shut down trading session yesterday, at 11:08. At that time, BET indice lost 9.25%, BET-C 10.68%, ad BET-FI neared to bottom limit, with 14.64% plunge. BET-XT slid 11.05% and BET-NG dropped 10.26%.
“There is surely a show at Bucharest Stock Exchange, but not necessarily a pleasant one. I don’t think indexes have ever had such big volatilities. This day is a day to remember”, said Adrian Barbulescu, analyst at Prime Transaction.
After regulator’s decision to suspend trading session, president of BSE announced in a media briefing that the measure is well-grounded and aims at giving time for investors to reconsider their investments.
Financial consultant, Bogdan Baltazar said this evolution mirrors the “whirly government, visible through those regulations, through wages raises and threats of state employees”.
“BSE did what it was written in the regulation, shut down trading session when BET and BET-FI neared to bottom lows. Tomorrow (t.n – today) the stock exchange will recover, regardless to evolution of foreign stock markets,” Baltazar added.
Stock market in Sibiu halted transactions with derivatives on stocks right after the same measure had been adopted by Bucharest Stock Exchange, although derivatives on foreign currency exchange rate were still on, said Darius Cipariu, deputy manager at Sibex.
Late yesterday, after panic faded out, and things tempered down, brokers, managers and analysts said all together it was a day to remember.
“It has been aggressively sold on the market in the last 2-3 sessions, the beacon of the market being BRD. We have witnessed aggressive exists by some non-resident investors. The massive exists and local sentiment has fuelled panic that shook up quotations. Recoveries that everybody forecasted in America, after the bailout plan had been approved were not confirmed, and many investors preferred to mark down losses. There was strong pressure at sale”, said Adi Lupsan, deputy manager at Intercapital Invest.
“I think these gloomy moments will be remembered for long time. Yesterday’s events are just a little part of what crisis is. It is deep, and yesterday’s shut down proved us that this it will not end soon”, said Florin Dolea, chairman of Pioneer Asset Management.
From all-time highs down to bottom low quotation when the trading was halted, BET lost 66.6%, BET-C 18%, while financial index nears to 80% loss.
After the emergency session of BSE board, lawmakers decided to ask brokers’ opinion. Most of the brokers approved the suspension decision throughout the entire trading session.
“I believe the yesterday’ halt was well-grounded, as the panic swept off trading since earlier this week. Negative news gained magnitude and any news on the possibility that Romanian economy is more affected that it had been initially estimated, bolstered investors’ fears. SSIF Confident Invest agreed on halting transactions yesterday, and this will trigger lower flows, and lower incomes,” said Georgiana Pacesila, Asset Manager at Confident Invest Bucharest.
She added that yesterday was an alarm signal by suspending transactions throughout the day. “We neared psychosis, in the context of zero purchase mandates on most issuers. Furthermore, the event is a normal matter of course as pressures in the market are extremely high, market is low-developed, and high volatilities may emerge even in the lack of big investors,” Pacesila explained.
Florin Dolea considers this decision a one of the “stock market’s levers in this grim context”.
KD Capital Management has agreed on the halt as well. “We believe the halt is a welcomed action, designed to buffer investors’ fears, whose panic was visible throughout yesterday session. A prompt and mature reaction from lawmakers; equity market institutions, brokers community and issuers may contribute to tempering down the market by approaching a coherent strategy in overcoming the international squeeze,” said Silviu Enache, general manager of KD Capital Management.
Intercapital Invest agreed as well in halting yesterday’s session, as this was the only solution to stop the sharp declines registered by biggest issuers, said Nicu Grigoras, broker at SSIF.
“Shutting down trading session was absolutely normal in the actual market conditions, marked by extremely high volatilities registered on international stock markets that geared over 10% slumps in local trading indexes. In these terms, according to BSE’s regulation, trading is suspended. It is a less encountered situation on the domestic market and which was impossible to avoid in the actual context, ” he stated.
Translated and adapted by Camelia Oancea.
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