Slovenian and Croatian Fund Managers & Their Views on the Romanian Economy & BVB Listed Companies

In February we brought to you our 3rd annual interview featuring 3 portfolio managers from reputable international Asset Management Companies that are actively investing in Romania, Croatia & Slovenia. You can read it here if you missed it the first time around. Today, we are bringing something similar & equally interesting! An “up to the point” interview with Croatian & Slovenian fund managers who run “Regional” equity funds that have been investing in Romania for years.

First, let us introduce our participants & Asset management companies they work for.

InterCapital Asset Management is the biggest independent asset management company in Croatia with AUM of c. 500 mil EUR. Đivo Pulitika manages ICAM BET ETF & Jure Borovac manages ICAM’s actively managed equity fund which invests in the region.

Generali Investments Slovenia was the first asset manager in Slovenia and is now part of Generali Group, one of the largest insurance and asset management providers. Its total AUM is nearing EUR 2bn mark. A big thank you to Grega Meden for participating! He has been investing in Eastern Europe region for roughly 20 years and he has seen it all!

NLB Skladi is the largest asset management company in Slovenia with an AUM of c. EUR 2.5bn & is part of the biggest domestic bank, NLB. A big thank you to Matej Mazi for participating! His focus lies on Central and Eastern European equity markets.

As you might know already, on 29 May, Intercapital Asset Management listed its BET Total Return ETF on the Bucharest Stock Exchange. It is a big milestone for the entire InterCapital Group which sees a lot of potential in the Romanian capital market. For those of you who are not so familiar with the RO local market, or you want to compare your views on it with the views of a few selected fund managers, we encourage you to spare a few minutes of your time to read the following interview.

I. A view on Romania from a passive investor point of view.

Q: Đivo, can you please share with us why ICAM chose to create & list its BET TR ETF on BVB? Can you give us 3 main reasons why you feel this a quality investment proposition?


At this moment, Romania seems to have it all – there is the prospect for growth, the valuations are cheap, and future investors’ flow should be supportive. Making 50% of the index, the energy sector is represented by both oil and gas (to benefit from the new discoveries in the Black Seas, leading to increased production and exports) and renewables (hydro, nuclear) which provide security in these volatile geo-political times and enjoy high demand coupled with support from the EU policies. Banks, which make up 30% of the index, enjoy better times now than in the last decades, as interest rates are high, and the economy is growing. The last part of the index, a diverse group of entrepreneurial companies, represents newcomers to the exchange – companies proving Romania generates new business ideas and has enough managerial potential to create further value. These potentials have not yet been fully recognized by investors, as the index trades relatively cheap – with a P/E ratio of around 9x and a dividend yield of 6%, Romania stands out both compared to the global markets and the CEE region.

Adding the amazing track record these last few years (and even decades) coupled with new attractive offerings such as the Hidroelectrica IPO last year, it is no wonder that more and more investors recognize this market and want to be present. Interest from retail investors is growing rapidly, as witnessed by a record number of trades and trading accounts opened within the country. Another big opportunity seems to be approaching, as Romania is close to meeting all the MSCI criteria for reclassification from Frontier to Emerging Markets. This will put the country in the spotlight for many more international investors, probably bringing more assets to the local stock exchange and further supporting prices.

All this combined is why we decided to offer our ETF on the Bucharest Stock Exchange. In addition to being attractive, this is the easiest way for Romanians to invest in all the index components at once. With a single trade, you get a diversified portfolio of the largest Romanian companies, the dividends are automatically reinvested, and the low costs (below 1% annually) ensure you can enjoy seeing your investment closely tracking the BET-TRN index.

II. A view on Romania from an active investor’s point of view.

Q: Can you explain in 3 sentences why Romania needs to be part of a quality & diversified investment portfolio?


First of all, the Romanian market enables investments in key strategic players of the country, and you could say the region too. With a strong GDP growth that is expected to continue in years ahead, due to fiscal support and EU funds, and significant infrastructure improvements since the 2000s you have a perfect macro backdrop that should be a big driver going forward. Connecting this with valuations that look significantly more attractive than other emerging, frontier, and developed markets, Romania offers outstanding potential for further growth with lower risk that comes with EU membership.


Romania’s economy is projected to grow by 3.3% in 2024, an increase from 2.1% in 2023, driven by higher private consumption and easing financial conditions. Significant public investment, particularly in EU-funded infrastructure projects, also supports economic growth. Rising disposable incomes signal improved living standards and economic confidence. Employment is expected to increase, stabilizing the unemployment rate at 5.5%. These infrastructure investments are anticipated to yield long-term economic benefits.

However, inflation remains a challenge, expected to decrease to 5.9% in 2024 but still posing risks due to wage hikes and high core inflation. The government deficit is forecasted to rise to 6.9% of GDP, driven by increased spending on wages and pensions. Consequently, the debt-to-GDP ratio is projected to reach 54% by 2025, highlighting the need for fiscal consolidation. Weak growth in major EU trading partners negatively affects exports, while rising imports widen the current account deficit. Geopolitical risks, especially from the Russia-Ukraine conflict, add to economic uncertainties.

In this environment of rising GDP growth and inflation above the 2% target, stocks serve as an inflation hedge. The Romanian stock market offers attractive opportunities due to its relatively low valuations compared to other European markets, though it is more expensive than the historical multiples average of the past decade. The Bucharest Stock Exchange is currently trading at a P/E ratio of 11.7x and an EV/EBITDA of 3.9x.


A lot of important reasons were already explained by my colleagues, but I will again turn your attention to the simple fact that Romania is very close to being upgraded to Emerging market status.  This is one in a lifetime event and as such a big opportunity for investors. Emerging markets classification is the one which really puts local stock exchange on the global financial market map. FTSE which is the smaller index provider than MSCI has already done it a few years ago and we have witnessed large amounts of new investor money coming to Romania at that time. Global capital flows are allocated by market classifications and some intelligence data show multiples around 1000x more assets dedicated in the EM classification market than in Frontier markets. With last year’s IPO of Hidroelectrica, Romania has fulfilled the last obstacle to be upgraded. We expect the promotion to happen rather sooner than later.

 Q: What are your main top picks in Romania and why?


Romania’s energy sector is one of the strongest in the EU with great domestic importance. With Project Neptun Deep in the Black Sea expected to become a major alternative supplier of natural gas for domestic and export markets in the future we have a way of exposing to this transformative project through Romgaz and OMV Petrom each having a 50% stake. Other than the big energy and banking sector, the Romanian stock market offers interesting stories such as DIGI, a telecommunication leader in Romania with strong expansion plans and a technological edge to competition, or Sphera owning 160 restaurants with franchises from KFC, Taco Bell, and Pizza Hut giving consistent results. The point is, you can find serious companies with experienced management while having the benefit of lower valuations providing a certain “safety net”.


The banking sector remains a preferred investment area, with additional opportunities in companies like MedLife. In Q1 2024, MedLife’s net profit increased by 56% year-over-year to RON 13 million, surpassing estimates due to a 22% rise in net sales to RON 647 million. For 2024, MedLife aims to optimize operational flows, consolidate profitability margins, and reduce its net debt-to-EBITDA ratio.


Romania has great liquidity, especially comparing other regional stock exchanges. Large, listed banking sector (TLV, BRD), large energy companies (SNG, SNP, SNN, H20), and with energy sector connected big utilities (EL, TGN). I cannot mention any specific companies, because of our internal company rules, but I can only say that if you are a strong dividend lover, the Bucharest Stock Exchange is the best place to be. Dividends tend to be in the range of 10 % for years ahead. The reason is big state ownership and the local state budget is always in deficit.

This brings us to the end of this interview. Hope you found it useful and please note that all views and thoughts which were expressed by our 4 experts should not in any way be interpreted as investment advice.

Category : Blog

Want to invest? Do not know how and where? Contact us and we will solve everything for you.