Regulars
Vivid SHARE PORTFOLIO
by Adrian Stefanescu
November 2004
The BET, the Bucharest Stock Exchange’s main index, reached
a historical peak on 15th October - having risen by 62.5 per cent since the
beginning of the year - against a targeted inflation rate of 9 per cent set
for 2004 by the central bank. Last month’s increased liquidity in the
blue chips, particularly in the oil company SNP Petrom, as well as the main
listed banks, BRD Soc Gen and Banca Transilvania, indicates the likelihood
of increased investor interest from abroad.
Capital market developments during the month included a concerted effort by
the Securities Commission, to insist on the greater transparency of issuers,
who are now penalised for not fully disclosing their financials and other
relevant information which might affect their share price. Also, five groups
of formerly RASDAQ-listed companies transferred to the BSE, in a project that
is finally aimed at merging the two markets. The two events combined to bring
a quantity of forgotten stocks into focus, some boasting exceptional financials,
which led to a rush in demand and a consequent surge in their share price.
As for our portfolio, last month we received bonus shares as well as the shares
we subscribed to in advance during Banca Transilvania’s (TLV) capital
increase earlier this year. We then sold our TLV shares at ROL 7,000/share
since the financial ratios indicated that the stock is overpriced. This proved
to be costly, however, as market enthusiasm took the price of TLV another
10 per cent higher after our sale, while the other major bank, BRD Soc Gen,
was left behind in terms of market ratios. Accordingly, we bought 35,000 BRD
at ROL 27,400.
We also decided to hold onto Argus (UARG), the edible oil producer we invested
in two months ago. There are major movements in this sector, with Cargill,
the giant American agricultural firm, and Bunge, another huge international
agricutural producer, moving into the market. Cargill has already purchased
two edible oil factories recently, which gives further hope that Argus may
well be similarly regarded as a potential target for acquisition.
These comments shouldn’t be construed as advice or recommendation to
invest in any kind of security or to buy and/or sell the above discussed stocks.
The value of stocks can rise and fall and a successful track record is not
a guarantee of future success. The author of the above article is an active
investor on the Romanian capital market, who is currently trading the stocks
discussed above, thus his comments should be considered accordingly.
HOW THE PORTFOLIO STANDS
|
Company |
Quantity |
Price |
Average |
|
BRD Societe Generale |
35,000 |
27,400 |
27.400 |
|
Argus Constanta |
50,000 |
32,000 |
26,400 |
