The Stock Exchange has lost 3.7 billion euros over the last three weeks, whilst the RON has depreciated by approximately 2.2% since the onset of American financial market crisis, reported ZF.ro.
The negative news coming from the foreign markets over the last month prompted a severe correction at the Stock Exchange, despite the fact that the most important Romanian companies listed on the BSE reported very good results in the first half of the year. On the forex market, the RON saw a major depreciation against the euro, with interests for short-term deposits experiencing a significant increase. If international markets do not rally quickly, funding institutions could make credits more costly and ask for additional guarantees from those requesting loans.
The problems on the foreign financial markets have continued to deepen over the last week as, in addition to the crisis of risky mortgage credits on the American market, a new crisis emerged - low liquidities in the financial system. This prompted central banks in the USA, Europe and Asia to pump over 150 billion euros into the market, in order to avoid a liquidity crisis that could paralyse the financial markets.
The European capital markets experienced a severe blow, with banks' stocks being the hardest hit. The American market is itself continuing its correction, although the intervention of the American central bank, the Fed, has somewhat relaxed investors. This generalised correction of the international markets is also prompted by the big investment funds, which are exiting from riskier instruments in order to be protected against the high volatility of the market.
"The capital markets are experiencing a period during which the appetite for risk has declined, and investors on the stock markets are exiting in order to be protected against large price fluctuations. This is a normal correction, coming after the strong growth of capital markets. However, there is currently no information pointing to the trend reversing in the longer run," said Mihai Ion, president of Raiffeisen Asset Management, which manages funds investing both on the domestic market and on the external markets.
For the Romanian market, this means, at least in the short-term, a suspension of foreign capital inflows, which maintains a negative attitude among investors.
Therefore, despite record profits reported in the first half of the year by the two main listed banks, BRD and Banca Transilvania (TLV), the market has undergone significant corrections. The BET index lost 1% on Friday, having declined 6% since the beginning of the crisis, whilst the SIFs (financial investment companies) lost 3.1% on average during the Friday session, and 13.5% over the last three weeks.
"The progression of the international markets has had an impact on the Romanian market, whilst also taking place during a holiday period. In fact, capital exits are being witnessed on all the markets in the region, accompanied by the depreciation of local currencies," Mihai Ion added.
In addition, the RON lost almost 0.6% against the euro on Friday. Over the last three weeks, the RON has depreciated by 2.2% against the European currency.