Vivid SHARE PORTFOLIO
by Adrian Stefanescu
October 2005
The stock market was quite volatile over the summer, mainly due to questions surrounding the supposed resignation of Prime Minister Tariceanu. Nevertheless, it managed to retain its upward bias.
Undoubtedly, the main event of the period was the legislation implemented increasing the ownership ceiling in the state investment funds (SIFs) from 0.1 per cent to one per cent. The news, expected by investors for years, saw the value of shares in the SIFs increase by 50 per cent in the period. As our holdings are concentrated solely in SIFs, we profited (on paper) accordingly.
Notwithstanding the rallying SIF prices we still consider them undervalued and events such as the upcoming privatisation of BCR (each SIF owns about 6 per cent in BCR) and the profitable exit from drugmaker Sicomed of SIF4 and SIF5 should lift their value further.
Macro events too have encouraged both foreign and domestic capital inflows in the stock market in the period to come. Recently, Standard & Poor upgraded Romania’s ratings from speculative to investment grade due to enhanced macroeconomic indicators. Moreover, politics at the National Bank of Romania has led to a dramatic reduction of interest rates, which we expect will attract capital out of bank deposits and into the stock market.
On the trading front, we acquired a further 100,000 shares in SIF2 and 100,000
shares in SIF5 at RON 1.18 and 1.39 respectively, as well as 10,000 shares
in BRD at RON 12 per share. BRD Soc Gen had announced a 97 per cent increase
in net profits and 43 per cent increase in its credit portfolio in the first
semester.
HOW THE PORTFOLIO STANDS
| Company |
Quantity |
Price** |
Buying Price |
| SIF Moldova |
200,000 |
1.48 |
1.135 |
| SIF Oltenia | 200,000 | 1.77 | 1.340 |
| BRD Soc Gen | 200,000 | 12.50 | 12.00 |
Cash: RON 14,605
Total value of protofolio: RON 789,605*
Invested amount ROL 1 billion (approx $30,000)
Return 5th January 2004 - 15th September 2005: 690 per cent
*trading commission of 1% included
**As at 15th September 2005
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.
