As of September 2022, Fondul’s NAV reached RON 15.43bn, which would translate into a NAV per share of RON 2.6935, an increase of 29.4% YoY and a decrease of 4.5% MoM.

According to the latest Fondul Proprietatea’s NAV report (30 September 2022), Fondul reported a total NAV of RON 15.43bn (EUR 3.12bn), which translates into a NAV per share of RON 2.6935 (EUR 0.5443).

Comparing it on a YoY basis, the total NAV recorded an increase of 25.9%, while the NAV per share grew by 29.4%. Nevertheless, compared to August, NAV decreased by 4.6%.

Fondul Proprietatea’s portfolio structure still remains focused on the power utilities generation sector (78.5% of NAV) with Infrastructure (6.9%), Power & Gas supply and distribution (5.5%), and Oil & Gas (4.5%) following. This is also why the three biggest holdings, Hidroelectrica, Aeroporturi Bucuresti, and OMV Petrom amount to 87.5% of the total NAV of the Fund. In terms of the Fund’s portfolio structure, unlisted equities accounted for the vast majority of NAV, standing at 92.6%. Following them, we have listed equities with 5.4%.

Turning our attention towards the share price’s performance, during the month, the Company’s share price remained mostly flat, decreasing slightly by 1.3%, ending the month at RON 1.96 per share. The current discount to NAV per share stands at 30.6%.

Fondul Share Price & NAV per Share

Source: Bloomberg, InterCapital

At the end of September 2022, BET decreased by 11.8% MoM, while on a YTD basis, it decreased by 17.8%, ending September at 10,639.41 points.

The Bucharest Stock Exchange has published its monthly trading data for September 2022. In it, Stock Exchange highlighted that in the first 9 months of 2022, more than 140,000 were made (48% more compared to August), representing the second-highest monthly value so far this year. At the same time, the total trading turnover amounted to EUR 3.5bn in the first nine months (+34% YoY), which translates into a daily trading turnover of EUR 185.3m.

Also, during September sharp declines sent most global equity markets into a correction as the possibility of a recession takes its toll. Most stock indices on global markets declined in September, marking a double-digit decline at the end of the first 9 months of this year. Investment sentiment deteriorated as investors fear about rising interest rates. These elements already overlap a long line of uncertainties.

The end of the first 9 months also found itself in negative territory for Romania with BET-TR index losing 10.5% of its value, while BET declined 17.8%. We note the BET-TR index reached an ATH in the previous month, so a moderate decline during times of uncertainty does not surprise. Nevertheless, the capital market in Romania aligned with international trends.

The most traded companies in September were OMW Petrom with RON 168m, Banca Transilvania with RON 166m, followed by Evergent Investment and Fondul Proprietatea with RON 82.3m and 54.4m, respectively. Overall, Romania’s indices showed a slightly stronger resilience compared to global indices, which reported a slightly more pronounced decline.

Moving on to the companies which constitute the largest Romanian Index, BET, only 1 out of 20 companies, BVB, increased by 27.1% during the first nine months. But at the same time, Romgaz remained flat. Romgaz is followed by Transgaz, One United Properties and OMW Petrom, which decreased by 2.8%, 3.2% and 9.1% YTD, respectively. Every other constituent in BET reported a double-digit decline. At the bottom of the list, Teraplast decreased by 47%, Purcari by 41.3%, Aquila by 40.6% and BRD Group by 35.7%. The decrease in financial companies (Banca Transilvania, BRD) can be attributed to the current macroeconomic situation in Romania, especially the inflation rate, which hit 15.9% YoY in September. To combat this, the Central Bank has been increasing the interest rates, which again, affects the profitability of financial institutions.

Performance of BET index and its constituents in September 2022 (%)

Source: Bloomberg, InterCapital Research

In total, the BET index ended the month at 10,639.41 points, which is a decrease of 11.8% MoM.