Where to invest in 2009, the second year of financial crisis?

Andreea Gheorghe, manager of analysis department at Intercapital Invest says the large gain period at BSE ended in early 2008.

“Now, it is certain that 2009 will not be marked by massive gain spree at BSE, whereas it can be a good year for amassment, probably in the second half. I don’t expect a trend switch, but we will see broad declines only if things will get hasty next year or if 2009 events will prove to have been over-evaluated”, said Andreea Gheorghe.

Although on the capital markets there are both shares and safety sectors for investors that yield low returns at low risks, at Bucharest Stock Exchange, the issuer configuration cannot offer a safety sector in this bad economy, and companies with good financial prospects for 2009 will be isolated or random, generated by specific factors, Andreea Gheorghe added.

Bucharest Stock exchange anticipates the economic evolution, as in 2007 and 2008 had a negative response before the local system worsens. Therefore, the same thing will happen in case of a bullish trend.

“The selection on issuers will be made based upon potential estimates and attractive assessment indices, the potential being generated by various factors (performing management, interesting field of activity) and less on the dynamic registered by the companies”, said Intercapital representative.

She also stressed that if the local and international climate remains bleak, there must be considered the fact that the declines registered in the last year and a half were drastic, and the deals’ value is more than modest.

“2009 will be marked by tapping and uncertainties. There is a complex of hypothesis and a mixture of negative factors that can be eased gradually but in the context of a weak management of the situation, they can gear even wider-bandwidth unbalances. For the moment, the waiting mode and prudence are the best advices for an investor” Andreea Gheorghe added.

Extremely dangerous spiral

Local equity market started from very low prices in 2008.

“We’ve witness massive displacements in October 2008. It was a month when all investors were walled by the bleak outlooks. The minimum limit set in October will withstand if next year’s macroeconomic balance is preserved”, said Andrei Ciubotaru broker at Vanguard.

“After exceeding 4 lei/euro threshold, the exchange rate can hit an extremely dangerous spiral, due to the level of the private debt (real estate loans, personal need loans), its utmost being expressed in euro. The loss will be covered from the capital of the Romanian banks, which will have to be renewed. And this will be possible only if the parent-banks are in excellent shape”, said Andrei Ciubotaru.

Thus, if the central authority impels additional pressures on capital flows to and from Romania, the bottom limit previously set by BSE indices will fall. It is possible for the respective threshold to withstand the downslide of the local currency.

Money-market funds will yield higher returns than deposits

Asset management market in Romania has been withered by the downtrend of the capital market.

“2008 was actually a step forward towards market’s maturation, considering that low-risk product range has been developed. Moreover, Romania is the only European market that recorded positive incomes in investment funds, which reflects the high growth potential of the market”, said Mihail Ion, manager of Raiffeisen Asset Management.
As for where to invest in 2009, he recommends stock funds and money-market funds, as well as intermediary options.

Another alternative for investing in 2009, it similar to a mutual fund, but in a more personalized variant, namely individual administration of portfolios.

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