Article Tools

Romania: Bucharest Stock Exchange to Be Enlarged?

Published: October 7, 2013; 22:22 · (Vindobona)

Ludwik Sobolewski, new CEO of Romania’s Bucharest Stock Exchange (BSE), is toying with the idea of enlarging the institution and making it a competition to Budapest, Vienna and Prague withing two years only.

Romania: Bucharest Stock Exchange to Be Enlarged? / Picture: © Vindobona.org

In an interview with “Business Review Romania” Sobolewski said that BSE was lacking major companies to attract investors and particular markets like bonds and derivatives. “Derivatives practically do not exist and they will not exist as long as the equities market suffers from this low liquidity, so we have to work on liquidity in the equities market and then we can realistically think about launching the derivatives market,” he said. Moreover, relations between corporations and possibles investors needed to be improved, as has to be transparency.

Sobolewski pointed out that the turnover of the stock exchange in Bucharest is very low and the capital available in Romania was limited, which is why the first growth phase had to be organic and uncertainties needed to be taken into account. Furthermore a network of local and foreign agents had to be established. He regards it crucial that no acquisitions will be made. “Maybe some sort of alliance could be productive but only this type of association,” he said and declared: “My aim is to have CEE composed of three visible markets: Warsaw, Vienna and Bucharest.”

In around two years, BSE, according to its CEO, is supposed to become a match for the stock exchanges of Prague and Budapest, regardless of the fact that there are still huge differences between the first and the latter. “This is realistic if we work hard and we have support from our environment, for example as regards regulation,” Sobolewski said.

In regard to future operations, he announced that his idea was to make Bucharest attract small businesses from very remote, yet, growing markets. First, however, the foreign listed companies will be located in neighboring countries in SEE. According to Sobolewski the strategy is comparable to the one he applied with the Warsaw Stock Exchange, which became a regional hub for more than 50 foreign companies including an enterprise from China (packaging machinery manufacturer Peixin).

Despite of the Romanian Stock Exchange finding itself in stagnation and being “unproductive”, Sobolewski is positive that BSE could be taken “out of this mud in which it is now stuck”.

“We can to some extent create new expectations, create new ways of doing business as, for instance, I did in Poland when everybody was skeptical that it was possible to launch a market for very small enterprises which then became New Connect,” he said and referred to major companies like Transgaz, Petrom and Transelectrica. “But it’s not productive in the sense that investors and other companies can benefit; it’s unproductive because we don’t have turnover, liquidity, so this is a peculiar situation,” Sobolewski added. The reasons for BSE currently being in a low was to few intermediaries, insufficient infrastructure like lending and borrowing of securities as well as trading hours, which the CEO considers too short. Moreover, additional promotional marketing had to be carried out, Sobolweski stated.