According to the latest report on the performance of the Bucharest Stock Exchange, several new records were made in January 2024. Firstly, the total market capitalization peaked at RON 321bn (EUR 64.5bn). Secondly, the total value of trades amounted to RON 1.7bn during January, growing by 152% YoY. This can also be seen in the main BET index, which grew for the 3rd consecutive month in a row, reaching a new all-time high.
The latest monthly report on the performance of the Bucharest Stock Exchange has been released recently, for the month of January 2024. In the report, we can see that several records were set on the Exchange during the month, continuing solid performance from 2023. For example, during January, the total market capitalization peaked at RON 321bn (EUR 64.5bn), with the total value of all trades amounting to RON 1.7bn, growing by 152% YoY.
Furthermore, the total equity turnover (including ETFs) amounted to EUR 312.9m, growing by 162% YoY, but declining by 29% MoM. This would also mean that the average daily turnover amounted to EUR 15.6m during the month. Moving on to the performance of the Romanian blue chips, in January 2024, out of the 20 companies observed, 17 recorded positive returns.
Performance of Romanian blue chips in January 2024 (%, MoM)
Source: Bloomberg, InterCapital Research
Of them, Aquila and TeraPlast recorded double-digit growth during the month, at 12.5% and 12%, respectively. Following them are Transport Trade Services at 8%, Purcari at 7.7%, and Digi at 3.9%. On the other hand, Hidroelectrica recorded a decrease of 2.5%, BRD of 2.2%, and Electrica of 0.7%. The majority of the remaining companies remained in between the 0 to 3% range during January.
This also meant that the BET index increased overall, by 0.9% MoM, reaching 15,729.39 points, marking yet another all-time high value.
The positive developments by the Romanian capital market also continue to attract new investors, as the number of investors reached 179k by the end of 2023, increasing by 46k or 34% YoY. The Hidroelectrica IPO has a special effect on this, as the large increase in the number of investors came during Q2 at 18k, during the discount period in the H20 IPO. In Q1 and Q3 the numbers grew by app. 8.5k investors each, respectively, while the number in Q4 increased by over 10k.
Of course, besides equity investments, the Bucharest Stock Exchange continues to attract investors due to the Fidelis government securities (similar to retail bonds in Croatia, and the recently launched bonds for citizens in Slovenia), which show that there is definitely an interest in these types of investments, especially when the conditions (interest rates offered), are good. This is also one of the advantages of the Romanian Government bonds issued in the local currency, leu. The reason being is that the exchange rate for this currency with the euro has been stable at 5 lei/euro, and the Romanian Central Bank is actively keeping it within a certain range around this mark. As such, higher interest rates can be achieved on a bond that basically has little to no exchange rate risk, as the interest rates are significantly higher on bonds issued in leu than the ones in the euro. Of course, this is due to the fact that the interest rates on Central Bank deposits are also higher in Romania, standing at 7% currently, as opposed to the 4-4.75% range in the Eurozone.
By the end of January 2024, the Slovenian mutual funds AUM grew by 3.8% MoM, and 19.5% YoY. It should be noted, however, that the net contributions played a significant role in this growth, contributing 8.8 p.p. to the 19.5% increase. In other words, if investors made no investments into the funds, the “real” growth would be closer to 10.8% YoY.
In the latest report released by the Slovenian Securities Market Agency, ATVP, we can see that the growth of mutual funds in Slovenia continues strongly at the beginning of the new year. In fact, by the end of January 2024, the Slovenian mutual funds recorded an increase in NAV of 3.8% MoM, and 19.5% (or EUR 816m) YoY, ending the month at almost EUR 5bn of NAV. To understand how this growth happened, we should look at the possible drivers of it.
There are two main ways that the NAV of the funds can increase, one being higher net contributions, meaning either more people investing or people who already invested investing some more, but usually, this ends up a combination of these 2 possibilities. The 2nd is the change in the NAV of the funds themselves, which comes from the change in the value of the underlying assets.
Starting off with the net contributions first, in January 2024, they amounted to EUR 48.6m, increasing by 70% MoM, and 131% YoY. Furthermore, in the last twelve months, the net contributions amounted to EUR 365.9m, an increase of 80.4% compared to the same period a year ago. This would mean out of the 19.5% (or EUR 816m) YoY increase in the NAV, 45% came from the net contributions (8.8 p.p. in relative terms to 19.5% growth). Furthermore, the number of subscribers also grew, by 2.4% MoM, and 4.2% YoY, and amounted to 532.8k.
Net contributions into the Slovenian mutual funds (January 2016 – January 2024, EURm)
Source: ATVP, InterCapital Research
That would mean that the remaining 10.8% YoY growth, came from the change in the underlying assets in these funds. Breaking this down further, the largest absolute increase came from shares, which grew by EUR 726m, or 24.8%, followed by bonds at EUR 122m, or 18.5%, as well as the money market holdings, which increased by EUR 74m, or 114%. On the other hand, investment funds recorded a decrease of EUR 66m, or 23.4%, while cash holdings were reduced by EUR 51m or 23.7%.
Meanwhile, on a monthly basis, the largest increase came once again from shares, which grew by EUR 190.8m, or 5.5%, while all the remaining asset classes remained roughly the same, some increasing slightly, while the majority decreased slightly.
Total assets of Slovenian mutual funds (June 2007 – January 2024, EURm)
Source: ATVP, InterCapital Research
Of course, equity holdings are the largest holdings of the Slovenian mutual funds, accounting for app. 73.1% of the total, and having increased by 1.21 p.p. MoM, and 3.10 p.p. YoY. Following them are bonds at 15.7% of the total, with a decrease of 0.61 p.p. MoM, and 0.14 p.p. YoY. Next up, we have the money market, deposits & cash, which accounted for 6.3% of the total, and have decreased by 0.22 p.p. MoM, and 0.69 p.p. YoY. Finally, there are investment funds at 4.3% of the total, with a decrease of 0.35 p.p. MoM, and 2.42 p.p. YoY.
Given that the equity holdings are the largest, it is also prudent to look more closely at how they performed. Roughly speaking, the Slovenian mutual funds’ equity holdings are broken down by origin, i.e. those from home issuers and those from foreign issuers. By the end of January, home issuers’ equity securities amounted to EUR 57.4m, growing by 1.6% MoM, but decreasing by 4.5 p.p. YoY. On the other hand, foreign issuers’ equity securities amounted to EUR 3.59bn, increasing by 5.6% MoM, and 25.5% YoY.
Equity holdings of Slovenian UCITS funds (October 2007 – January 2024, EURm)
Source: ATVP, InterCapital Research
This would mean that besides net contributions, equity holdings, and specifically foreign equity holdings contributed mostly to the growth in the funds, which is to be expected as various foreign markets performed rather well for the last couple of months. This was driven by the better-than-expected economic results, inflationary pressures slowing down, and the expectations that the Central Banks (more specifically, ECB and the Fed) will cut interest rates this year, which of course has a positive impact on equity holdings in particular.