28 Noiembrie 2008

Impact of Morgan Stanley and KBC Securities exits for the Romanian stock market

Two of the most important shareholders at Bucharest Stock Exchange have recently announced their exit. Morgan Stanley and brokerage firm KBC Securities put up for sale the stakes they hold, although the price of a share fell more than 50% compared to their acquisition value. Specialists polled by Wall-Street say these exits will affect the image of the institution, being considered as a sign of mistrust of shareholders.

Earlier this week, American investment bank Morgan Stanley decided to sell off the stake it holds at Bucharest Stock Exchange at 40 lei/share, setting an initial 8.2 million lei target, approximately 2.7% of BSE’s equity, according to information appeared on the institution’s webpage.

Specialists say they had expected these exits, considering that in general, any investment must generate profit.

“Examining the stock mart’s earnings in the coming period, they are surely not at the same level as they were last year, and many investors went on a selloff spree, and they will probably redirect their investment towards other profit-making fields, or they will choose to remain on liquidity. Personally, I think these exits are based on a 100% economic factor, as many investors prefer restructuring their portfolios, and the thirst for liquidity is one of the factors that triggered these exits”, said Rares Sofariu, Research Manager at KD Capital Management.

Cristian Negoita, broker at Confident Invest said this move was linked to the need of liquidities of the seller.
“First of all, I think it is an exit generated by the need of liquidity, and if we take Morgan Stanley for example, its situation is not good at all. The price it claimed, it is natural to be lower, given the fact that this year, the stock market’s earning plummeted, and the outlooks are not positive,” said Negoita.

In these shaky economic conditions, when investors become more and more pessimistic, most of the assets fall in terms of value. Highly visible assets and accessible to all investors register the biggest fall. Therefore, the decision of the two shareholders at BSE comes in the context of major exits of foreign investors from emerging countries,” said Nicu Grigoras, broker at Intercapital Invest.

Alin Brendea, operation manager at Prime Transaction, does not think the exits are linked to the individual evolution of BSE but the tracking of general economic evolutions in 2008.

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