Romania’s stock market is fast becoming one of the top performers in Europe, with investors confident that the rally will continue as more companies are expected to go public, according to finance markets media outlet Bloomberg.
The BET index of the Bucharest Stock Exchange has delivered a return of nearly 40% in dollars over the past 12 months, making it the fifth-best performer among more than 90 primary stock indices tracked by Bloomberg. Even after some fluctuations in August, the index remains close to its record high, having advanced in 13 of the last 15 months.
The USD 1.8 billion IPO of Hidroelectrica, Romania’s largest renewable energy provider, brought much attention to the BVB.
“This, in turn, revitalized local interest in the stock market, boosting valuations and trading volumes—although the latter remains low by international standards,” the Bloomberg article notes.
Analysts are still optimistic about BVB’s outlook due to upcoming IPOs.
The improved macroeconomic outlook is coupled with bets that Eastern Europe’s stock market could be upgraded by MSCI – possibly as soon as next year – from its current frontier market status to emerging market status. To reach that goal, BVB still needs to meet liquidity requirements.
Attila Gyurcsik, CEO of Accorde Fund Management in Budapest, said MSCI usually upgrades markets during its summer review, meaning the next likely opportunity for Bucharest will come around mid-next year.
Interestingly, Hidroelectrica’s shares have risen by only 11% in dollars over the past 12 months, meaning other Bucharest stocks are leading the way. BET now has the same price-to-earnings ratio as MSCI’s emerging markets benchmark, while Eastern Europe’s largest stock exchange in Warsaw trades at a discount of about 30%.
A Bloomberg survey of economists shows that Romania’s GDP is expected to grow by 3.5% in 2025, up from 2.7% this year. Upcoming general and presidential elections, along with the government plan to tackle a ballooning budget deficit, do not dampen optimism about BVB’s future, Bloomberg says. Meanwhile, the local stock exchange plans to launch derivatives trading, both in equities and the benchmark stock index, as well as in electricity, by mid-2025.
(Photo source: BVB website)
