EC's gloomy projection drives BSE indices into the red

The stock market took a mild nosedive in this week’s early trades, at a low liquidity of 2.6 million euros. Experts polled by Wall-Street say the somber projection of European Commission and the off-balances of the European banking system were the primary reasons of yesterday’s evolution.

Yesterday, BET index slid 2.19% after positive early trades, while BET-FI fell 2.85%, the most liquid issuer being FIC Moldova that rolled 1,095 million shares, the issuer loosing 5.36% compared to previous session. BET-C indice fell 1.82%.

“We had a session with a positive start, and appreciations attuned to generally rising European markets. When European Commission made public the projections for 2009, the Romanian stock market set the bearish ball rolling, combined with the dwindling European bank shares and gloomy outlooks for the entire system. When the prices were sliding down, the liquidity began to increase, whereas it remains at very low parameters. We remain connected to external markets, but only for wide-bandwidth fluctuations of the foreign stock exchanges”, said Gabriel Necula, deputy operation manager at Prime Transaction.

“European indices had a positive evolution in yesterday’s early trades. DAX indice was plummeting 1.14% at 17:00, after bullish opening head start”, said Mihai Hancu, broker at Intercapital Invest.

The news that squashed the European stock exchanges came from British bank Royal Bank of Scotland, which is likely to state 31 billion euros loss in its 2008 annual earning report, on February 26. RBS quotations collapsed at London Stock Exchange.

After the positive debut, the yesterday’s grim projections switched the evolution of the market. Thus, Necula said that both EC’s estimates for 2009 and the worsening of pessimistic expectations in the banking system have equally influenced the downdraft of the local stock exchange.

“The press release spawned a massive sell-off spree, as EC’s forecasts exceed in pessimism the expectations of investors, BNR and Romanian government. The perpetuation of the massive sell-offs was only a legitimate response of the market”, he explained.

The sentiment of uncertainty will rein back the stock market deals in the coming days as well, considering that the major American banks reported record losses in the final quarter of 2008. Oil barrel is now traded at 35.9 USD , after a new low of roughly 33 USD, Intercapital’s broker explained.

“BSE’s indices had negative evolution at very low volumes. We expect hesitating evolutions in the coming period, if the international markets remain relatively steady”, he added.

Thus, the next trends will be marked by the same restraint and by events that will shake up the market.

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